How can budget announcements impact silver prices?
As India prepares for the Union Budget 2026, investors and industry participants are keeping a close eye on how this budget may impact the demand for precious metals, especially silver. Silver is quite different from other commodities. Apart from being an investment asset, it is also an important industrial metal. With prices hitting multi-year highs and structural changes in demand, policy signals from Budget 2026 could have a long-term impact on silver market dynamics. Let us also tell you what the experts have to say in this matter?
Market movements have already begun
There has been a dramatic rise in silver prices in the beginning of 2026. On January 30, on the Indian Commodity Exchange (MCX), silver prices reached a life time high of Rs 4.20 lakh. After that, on January 31, there was a big fall in the price of silver and the price came to the level of Rs 2.91 lakh. Before that, the rise in silver prices was due to demand for safe investment, weakening rupee and strong investment interest. A major reason for this rally is macroeconomic uncertainty, including geopolitical tensions and inflationary pressures, which have pushed investors towards precious metals as a risk hedge.
Import duty and price signal effect
The budget can have a direct impact on silver prices and demand through adjustment in import duty. India imports more than 80 per cent of its silver requirement, which means any duty change has an immediate impact on domestic prices and demand. Currently, silver in India attracts about 7.5 percent customs duty and 3 percent GST, the prices of which often fluctuate depending on global trends.
Ahead of the Budget, analysts believe that if the government reduces import duties, domestic prices may soften, making physical silver more attractive for jewelery buyers and investors. However, if tariffs are increased, it could have the opposite effect, pushing up domestic prices even further and limiting demand among cost-sensitive consumers.
The gems and jewelery sector has been vocally demanding import duty reforms and relief in GST to boost demand and make Indian products more competitive globally. If such measures are implemented in the budget, they may also indirectly boost silver consumption.
Boost to industrial demand and green energy
Apart from taxes, Budget 2026 is expected to provide incentives in line with India’s renewable energy ambitions. Silver plays an important role in the manufacturing of solar panels and other green tech, where its high conductivity is valued. The pre-Budget outlook suggests that policies to promote solar infra, including expanded production incentives and subsidies, could boost industrial demand for silver by 15-20 per cent over time, although these effects will not be visible immediately but gradually.
Silver is also an important component in electric vehicles, being widely used in power electronics, battery management systems and charging infrastructure. Any support given in the budget for adoption of electric vehicles, domestic component manufacturing or charging networks could increase industrial demand for silver.
Increase in industrial demand
Over the past few years, industrial use has increased, with major applications being electric vehicles, electronics and solar energy production. In fact, electronics and electrical applications now account for about 68 percent of total industrial silver demand, Chirag Muni, executive director of Anand Rathi Wealth Ltd., told Money Control. This has supported prices, but also raises questions about whether industrial demand will continue to grow at the same pace at the current record-high prices, as producers begin to look for lower-cost alternatives.
Effect can be seen here also
Amidst all this, the interest of investors has also increased. There was huge investment in silver ETFs in 2025, which increased pressure on overall demand and imports. While the Budget’s tax measures will not change macroeconomic factors overnight, fiscal signals, especially related to import duties and industrial policy, will influence silver demand reaction in the near term. For both investors and the industry, Budget 2026 could prove to be a turning point in shaping the growth of silver markets in the coming year.