India Opens a New Institutional Door to Silver

Author: Przemysław Radomski

Published: April 1, 2026

Overview

India's mutual fund industry has recently been allowed to include silver in equity and hybrid portfolios, marking a significant shift in the investment landscape. This change is expected to enhance the demand for silver ETFs, which have already seen substantial growth driven by retail investors.

Current Market Context

India is the world's largest consumer of silver, with bullion imports reaching a record 247.4 million ounces (Moz) in 2024. The country has also seen a remarkable increase in silver ETF holdings, which grew by approximately 195% year-on-year, from about 13 Moz at the end of 2023 to 38.6 Moz at the end of 2024. This growth is largely attributed to a cultural affinity for silver, which is not paralleled in Western economies.

Regulatory Changes by SEBI

The Securities and Exchange Board of India (SEBI) has implemented two key reforms that facilitate mutual funds' access to silver. Previously, funds priced off the London benchmark faced a persistent gap compared to local silver prices in Mumbai, deterring institutional adoption. The reforms aim to close this arbitrage gap and allow for a more precise investment in silver ETFs.

Impact of the Reforms

As of April 1, 2026, mutual funds can now allocate up to 35% of their residual portfolio to silver, alongside gold, Infrastructure Investment Trusts (InvITs), and debt. This change opens a new channel for institutional investment in silver, which could lead to significant demand:

A 0.1% allocation from equity/hybrid assets under management (AUM) could imply approximately $950 million in new silver ETF demand (around 13 Moz).
A 0.5% allocation could lead to about $4.75 billion (approximately 65 Moz).
A 1.0% allocation could result in around $9.5 billion (approximately 130 Moz).

These figures represent potential demand rather than immediate flows, as actual allocations will depend on fund manager adoption over time.

Existing Growth Trends

Prior to these reforms, retail investors were already driving significant growth in silver ETPs, with a nearly threefold increase in holdings from 2023 to 2024. The institutional segment had not contributed to this growth, making the SEBI reforms particularly impactful as they build on an already expanding market.

Differences in Demand Dynamics

Retail demand for silver in India is often seasonal, influenced by cultural events such as weddings and festivals. In contrast, institutional allocations tend to be more stable and systematic, as they are based on investment policies that require rebalancing over time. This structural difference suggests that institutional investment in silver could provide a more consistent demand compared to retail fluctuations.

Conclusion

The SEBI reforms represent a significant development in India's silver market, creating a new institutional pathway for investment. This change is expected to enhance the overall demand for silver, particularly in the context of a growing asset management industry and a cultural affinity for the metal. The upcoming months will reveal how quickly fund managers will adapt to these new regulations and the potential impact on the silver market.