Investing Silver ETF commodity ETF

Silver ETF India

From WebNotes, a public knowledge base. Last updated 18 May 2026. Reading time ~8 min.

Silver ETFs in India are exchange-traded funds backed by physical silver holdings, providing retail investors exposure to silver prices without the storage, authenticity and purity concerns of physical silver. The category was enabled by SEBI’s October 2021 framework on silver ETFs, with the first Indian silver ETFs launched in early 2022. The category complements Gold ETFs (the older and larger precious-metal ETF category in India) by extending passive precious-metal exposure to silver.

For Indian retail investors, silver ETFs offer:

Pure silver-price exposure: Without physical storage or authentication issues.
Demat-mode holding: Through standard equity-trading accounts.
Liquid exit: Exchange trading during market hours.
Industrial-demand driven: Silver is both a precious metal and an industrial metal (used in electronics, solar panels, etc.), giving it different price drivers than gold.

This article covers the SEBI October 2021 framework, the major Indian silver ETFs, the operational characteristics, the comparison with gold ETFs, and the post-2023 tax treatment.

SEBI October 2021 framework

Regulatory introduction

SEBI introduced the silver ETF framework in October 2021, defining:

Underlying: Physical silver of specified purity (typically 99.9%).
Custodian: Approved depository for the physical silver holdings.
Pricing benchmark: LBMA (London Bullion Market Association) silver fix or equivalent.
Disclosure: Daily NAV based on silver-price-times-holdings minus liabilities.

Pre-framework era

Before October 2021, Indian retail investors had limited silver-investment options:

Physical silver (purity, storage, authentication concerns).
Silver coins and jewellery (high making charges, low resale value).
Some commodity-futures exposure for sophisticated investors.

The silver ETF framework filled a meaningful gap for retail-friendly silver exposure.

Major Indian silver ETFs

Following the October 2021 framework, multiple AMCs launched silver ETFs:

Nippon India Silver ETF (early 2022 launch).
ICICI Prudential Silver ETF.
Kotak Silver ETF.
HDFC Silver ETF.
Aditya Birla Sun Life Silver ETF.
Axis Silver ETF.
DSP Silver ETF.
SBI Silver ETF.
UTI Silver ETF.
Mirae Asset Silver ETF.

Silver ETF AUM has grown rapidly since the 2022 launch wave, though it remains smaller than the more-established Gold ETF category.

Operational characteristics

Physical silver backing

Silver ETF units are backed by physical silver held by the AMC’s custodian:

Storage: At SEBI-approved vault facilities.
Insurance: Adequate insurance on physical holdings.
Auditing: Periodic third-party auditing of physical holdings.

NAV calculation

Daily NAV is based on:

Silver price: LBMA silver fix or domestic spot price.
Quantity held: Per outstanding ETF units.
Less liabilities: TER accrual, custodian fees, etc.

TER

Silver ETF TER is typically 0.50-0.80 per cent annually, higher than equity ETFs reflecting the physical-asset operational costs (storage, insurance, auditing).

Comparison with Gold ETF

Dimension	Silver ETF	Gold ETF
Launch in India	2022	2007-2008
Market size (AUM)	Growing	Larger
TER	0.50-0.80%	0.50-0.80%
Underlying	Physical silver 99.9%	Physical gold 99.5%
Volatility	Higher	Lower
Industrial demand	Yes (electronics, solar)	Limited
Investment-demand drivers	Some, but smaller	Primarily
Long-term return	Variable	Typically positive over long horizons

Silver is generally more volatile than gold due to its dual nature as both precious metal and industrial metal.

Price drivers

Industrial demand

Approximately 50-60 per cent of global silver demand is industrial:

Electronics: Silver is used in conductors, contacts, electronic components.
Solar panels: Silver is used in photovoltaic cell manufacturing.
Electric vehicles: Growing silver use in EV components.

Industrial demand creates economic-cycle sensitivity: silver tends to outperform gold during industrial growth phases and underperform during industrial slowdowns.

Investment demand

Silver also has investment demand:

Inflation hedge: Like gold, silver is seen as inflation-protective.
Currency-debasement hedge: Particularly during periods of dollar weakness.
Coin and bullion demand: From individual investors globally.

Supply

Silver supply comes from:

Mining: Primarily as a by-product of copper, lead and zinc mining.
Recycling: From electronic and industrial sources.
Hoarding/Government reserves: Limited holdings.

Tax treatment

Post-April 2023 framework, silver ETFs are treated as debt-oriented for tax:

All gains taxed at slab rate as short-term capital gains regardless of holding period.
No long-term capital gains preference.
No indexation benefit for units purchased on or after 1 April 2023.

This treatment reduces silver ETF tax efficiency compared to direct silver holding (which is treated as personal-effects and taxed differently).

Pre-April 2023 purchases

For units purchased before 1 April 2023:

LTCG (>36 months): 20 per cent with indexation.
STCG (≤36 months): Slab rate.

Role in retail portfolios

Commodity allocation

Silver ETFs serve as part of the commodity allocation in diversified portfolios:

Typical allocation: 2-5 per cent for retail investors.
Combined with gold ETF: Provides precious-metal diversification.
Cycle hedge: Some allocation to commodities for inflation and cycle protection.

Tactical positioning

Silver ETFs allow tactical positioning during:

Industrial growth phases (silver typically outperforms gold).
Solar / EV industry growth.
Currency-debasement concerns.

Suitability

Silver ETF is suitable for:

Investors seeking commodity diversification.
Investors wanting silver exposure without physical holding.
Investors comfortable with higher volatility than gold.

It is less suitable for:

Investors wanting precious-metal stability (gold is more stable).
Tax-sensitive investors (slab-rate tax post-2023 is unfavourable).

External references

References

SEBI October 2021 framework on silver ETFs.
SEBI (Mutual Funds) Regulations 1996.
AMFI scheme data on silver ETFs.
Finance Act 2023 debt taxation amendment.

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed: 18 May 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.