India Faces Silver Shortage After Record Diwali Demand, Global Supply Chain Squeeze

Mumbai, October 21, 2025 –

India has been hit by a sudden silver shortage following an unprecedented surge in demand during the Diwali festive season, with leading bullion dealers running out of stock for the first time in recent history.

According to reports published between October 19 and 21, Vipin Raina, Head of Trading at MMTC-PAMP India, confirmed that the country’s largest precious metals refinery had completely exhausted its silver inventory amid a historic buying frenzy.

Key Drivers Behind the Shortage:

The demand spike was triggered by a combination of record-high silver prices and Diwali, a traditional time for buying precious metals in India. A viral social media trend comparing silver’s performance to gold further intensified retail interest, driving buyers to local dealers en masse.

However, the shortage wasn’t just a domestic issue it was exacerbated by global supply constraints already affecting the silver market:

• Industrial demand remains strong due to ongoing booms in solar energy, 5G, electric vehicles, and consumer electronics, where silver is a key component.

• A week-long national holiday in China disrupted normal supply chains, while shipping delays from New York to London hampered metal availability.

• In London, bullion stockpiles were largely locked in exchange-traded funds (ETFs), limiting the physical silver available for delivery.

• Additionally, the inelastic nature of silver supply with 70–75% of global output coming as a byproduct of copper, lead, and other metals means producers cannot quickly scale up production in response to surging demand.

Market Impact and Volatility

The market responded with a sharp rise in silver premiums, with local prices in Chennai crossing ₹2 lakh per kilogram a rare and unsustainable spike. Global silver prices surged to over $54 per ounce, before dropping sharply in what analysts described as highly volatile trading conditions.

In a report released this week, Motilal Oswal Financial Services (MOFSL) noted that while short-term price swings are likely to persist, the long-term outlook remains bullish due to persistent structural demand from industrial sectors.