If Not Gold, Can You Buy Silver Jewelry? Doesn’t That Also Consume Foreign Exchange? Find Out Here

India Gold-Silver Import: Amidst the ongoing conflict between Iran and the U.S., PM Modi has advised citizens to refrain from purchasing gold for a period of one year. He also urged them to adopt various other measures to cut down on expenditure.

India Gold Import Bill: During an event in Hyderabad on Sunday, Prime Minister Narendra Modi advised the nation’s citizens to adopt measures to curtail their spending. These measures range from avoiding gold purchases for up to a year to postponing non-essential foreign travel and opting for “Work from Home” arrangements.

PM Modi issued this appeal at a time when the country is grappling with the economic repercussions of the ongoing conflict between Iran and the U.S., as well as rising crude oil prices. Now, the question arises: given the restriction on gold purchases, is it permissible to invest in silver instead? Is there a possibility that this could impact the country’s foreign exchange reserves? Let’s find out.

The Impact of Silver Purchases on Foreign Exchange Reserves

Much like gold, India imports silver on a massive scale. India imports approximately 90 percent of its silver requirements from countries such as the UK, China, and Hong Kong. Although silver is less expensive than gold, payments for its purchase are also made in U.S. dollars. Consequently, purchasing silver in large quantities could place increased pressure on the country’s foreign exchange reserves.

Why Did PM Modi Specifically Mention Gold?

Despite the fact that increased silver purchases would also strain foreign exchange reserves, PM Modi specifically singled out gold because the import bill for gold is significantly larger than that of silver. In India, gold is regarded as the ultimate symbol of prosperity and the primary avenue for investment. Here, people accumulate gold primarily as a “reserve asset.” In contrast, silver is predominantly utilized for industrial applications, such as the manufacturing of solar panels and electronic chips.

All in all, the amount of foreign exchange that can be saved by curbing gold purchases is far greater than what could be saved by curbing silver purchases. Meanwhile, should a scenario arise where people shift their purchasing habits and increase their acquisition of silver instead of gold, the government possesses the authority to bring the situation under control by raising import duties on silver. Currently, the price of silver in the country stands at ₹2.75 lakh per kilogram. Due to the war, significant fluctuations are also being observed in its prices.