The country imported 343.29 tons of silver in the first nine months of 2014/15, compared to 139.92 tons in the same period of 2013/14. This means 1.27 tons of silver is entering the country every day. Demand for silver products, however, stands at around 300 kg per day, according to jewelers.In monetary terms, Nepal imported silver worth Rs 16.81 billion in the first eight months of 2014/15 compared to silver import worth Rs 6.89 billion in the same period of 2013/14.
With export of silver products increasing by a nominal 0.1 percent in the first eight months of 2014/15, according to Nepal Rastra Bank (NRB), officials do not have convincing answers on where such a high quantity of silver is being consumed.
Silver dealers attribute rise in silver import to growing domestic consumption. They say many businessmen are investing on silver in recent months. But officials are not convinced by their arguments.
On Tuesday, Department of Customs (DoC) held an informal meeting with representatives of NRB and Federation of Nepal Gold and Silver Dealers Associations to seek details of domestic consumption of silver amid hefty rise in silver imports.
"Rise in silver imports in recent months is surprising. But we don't know the exact reason behind this increment," Sishir Kumar Dhungana, director general of DoC, told Republica, adding" "Dealers told us that rise in import of silver is due to increasing domestic consumption, growing demand for silver jewelries in international market and the growing trend of silver-holding among investor"."
NRB officials also agree with jewelers. "The growing trend of holding silver among customers seems logical. Nepalis prefer to have different silver utensils at home for special occasions," Min Bahadur Shrestha, spokesperson of NRB, said. "Silver import is increasing also because there is no limit on its import like gold. People can easily import silver by paying applicable taxes."
The government levies customs duty of Rs 4,600 per kilogram on silver, according to traders.
WHAT DEALERS SAY?
Dealers are also surprised with the massive rise in silver imports in recent months. "Sale is increasing in recent months. But daily demand is still below 300 kg," Mani Ratna Shakya, president of the federation, told Republica, adding" "Growing cross-border business of silver (with India) might be one of the reasons behind surge in silver imports."
According to Shakya, demand for silver products is growing also because of drop in its price.
Price of silver has come down by Rs 100 per 10 grams over the past one year. On Thursday silver was traded at Rs 587.5 per 10 grams.
Former commerce secretary Purushottam Ojha said tariff difference between Nepal and India might have raised informal export of silver and silver products to India.
WHAT NEXT?
Director General Dhungana said it would have been good for the economy had export of silver products also increased in tandem with silver import. "Significant rise in silver imports have drawn our intentions. It should be thoroughly studied," he added.
Similarly, NRB Spokesperson Shrestha said they would study domestic consumption of silver and take appropriate measures accordingly. "If need be, we can put a cap on silver imports like gold," he added.
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