In less than 18 months, when they were first permitted in India, silver exchange-traded funds (ETFs) total silver holdings has crossed 3,000 tonnes in December 2025, up 120 per cent from last December.
With silver spot prices ruling at over Rs 3.09 lakh per kg (Rs 325,000 per kg on MCX futures), investors have been flocking to it. The white metal, 49% in a month and more than 200% in the past year.
Given the sharp rise in prices, investors have increased their investments. A large chunk of the spot market demand for silver is still buying the physical metal for investment purposes.
Rapid ETF Growth
According to the data provided by the bullion research firm Metal Focus, silver ETF silver holdings were 1,380 tonnes at the end of 2024. They have increased by 120 per cent to cross 3,000 tonnes in 2025. This means around a fourth of the silver imported in India has been picked up by ETF investors.
In the 2025 calendar year, India imported 7,158 tonnes of silver, down only 6.7% from last year, even when silver prices in the year have almost tripled.
According to the World Gold Council’s latest data, India Mutual Funds‘ total AUM for gold has increased by 37 tonnes to 95 tonnes now, showing an increase of 64 per cent in a year in quantity terms.
Shekhar Bhandari, President, Kotak Mahindra Bank, said that “investors’ interest is very high in gold and silver. A major silver investment has been made in the last one and a half years. Even investing in silver at the current price, they are making money as the average cost is low.
Investing in exchange-traded products of gold and silver is attractive for investors from a taxation angle also.”
Favorable Taxation Rules
Gold and silver ETFs short term capital gain is as per investors income slab, long-term (12 months and more for ETFs and 24 months for investors of Fund of Funds and Mutual Funds) is 12.5 per cent.
However, experts believe that prices are likely to correct as the market is already overbought. In the last one month, silver price has increased by 49 per cent in the spot market.
The Metal Focus report released last week said that silver prices may see a short-term downside, but this downturn is not expected to deter investors.
Impact of Tariffs
The report said that the Trump administration put off critical minerals tariffs for silver as of now. Worries about tariffs are likely to subside, at least for the time being. As a result, significantly higher CME stocks at present may encourage further outflows from the US to London.
This may bring the required price correction. However, the report notes, “precedent of EFPs blowing out and the unpredictable nature of US trade policy suggests that the practice of keeping metal onshore in the US to back short futures positions is likely to persist.”
The report also said that worries relating to the Chinese ban on silver export is not going to impact the prices significantly. It said such concerns are overstated, as the majority of conditions for exporters to comply were there last year also.