Local silver futures were trading around 57,900 rupees per kilogram on Wednesday afternoon.
The silver imports are set to triple in 2022 from a year ago to record highs after a dip in prices to 2-year lows spurred investors to bet that the metal was primed for a rebound and could outperform gold in the coming years.
Higher demand in India, the world's biggest silver consumer, could support global prices.
"Investment demand has been boosting imports," said Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer. "Investors are anticipating poor man's gold will beat gold in coming years."
India's silver imports in 2022 could jump to a record 8,200 tonnes, Mr Thakkar said.
In the first seven months of 2022, silver imports surged to 5,100 tonnes from just 110 tonnes during the same period a year ago, according to provisional data from Ministry of Commerce and Industry.
In 2020 and 2021 investors and industry sold off silver stocks after strong imports in 2018 and 2019, Mr Thakkar said.
"Destocking depleted available stocks in the country. At current prices, traders are investing. Since silver is not available in the country, imports are rising," he said.
The silver imports in 2020 and 2021 were 2,218 tonnes and 2,773 tonnes respectively, down from 5,969 tonnes in 2019.
Local silver futures were trading around 57,900 rupees per kilogram on Wednesday afternoon after hitting a record high of 77,949 rupees in 2020.
Investors like Umesh Patel, who bought two bars of silver this month, think prices have corrected too much, and will rebound soon.
"Silver is underperforming compared to gold. I'm hoping it will rise sharply like 2009 to 2011 period," said Mr Patel, who had received more than 200% returns from silver during the period.
Along with investment demand, imports have also climbed on growing industrial use, said a Mumbai-based dealer with a leading silver importing bank.
"Electronics, solar panel manufacturing have been increasing because of the government incentives. These industries are consuming more and more silver along with the auto industry," the dealer said.
India has been offering production-linked incentives to local and foreign companies for manufacturing electronics and solar panels in the country.
The country fulfils most of its silver requirements through imports, mainly from Hong Kong, the United Kingdom, China and Russia.
The rise in demand has been allowing banks and bullion dealers to charge premiums of up to 30 cents per ounce over global prices, while gold is trading at a discount, said a Mumbai-based bullion dealer with a private bank.
"Last year gold was trading in premium and silver in discount. Now exactly the opposite is happening," the dealer said.