While India imported 1,900 tonnes of silver in 2012, in the first five months of 2013 alone, imports have touched 2,400 tonnes.
"Silver stock with several bullion traders were getting exhausted and when prices started falling from mid-April, they booked heavily anticipating demand at lower levels as prices have been falling," said Monal Thakkar, president, Amrapali Group, a leading Ahmedabad-based bullion wholesaler.
According to industry estimates, silver imports during the January-March quarter stood at 760 tonnes. Imports shot up 720 tonnes in April alone, and in May, they further swelled by 920 tonnes.
Monal Thakkar advises consumers and investors to start buying silver now as prices have fallen by almost half from the peak of Rs 75,000 two years ago.
Gold and silver prices fell sharply today in the international market, but in India the price fall was lower due to a weak rupee.
Gold reached a fresh three-year low, while silver fell to its 34-month low levels on strengthening of the US dollar. With the dollar appreciating, investors moved from safe havens to risk assets, such as equities.
Both precious metals have lost heavily since the beginning of April this year. In India, the price fall was restrained due to the sharp fall in the rupee against the dollar. Gold was trading at a 33-month low of $1,239 an ounce, down three per cent, while silver was down 4.1 per cent and was trading at $18.85 an ounce.
In Mumbai's spot market, silver closed four per cent lower today at Rs 40,475 a kg, while gold was down 2.5 per cent lower at Rs 26,145 per 10g. According to analysts, since both have broken their technical support levels, further downside is not ruled out.
Jayant Manglik, president (retail distribution) at Religare Securities, said: "Gold may drift lower towards a level of $1,160 per ounce at COMEX and that would mean a corresponding level of Rs 24,200/10g at MCX in the near-term."
However, at some point in time, factors other than market sentiment will come into play. Gnanasekar Thiagarajan, director, Commtrendz Research, said: "Prices of both precious metals are near their cost of production and if they stay below that for some more time, mines will start cutting production, which will support the prices."