Silver Shortage Hits India's Sweet Shops Amidst Festive Season

Strategic Insights -

As the festive season sets in, sweet shops in India are struggling with a silver shortage, affecting their ability to produce traditional sweets like kaju katli and gulab jamun. The price of silver has skyrocketed, reaching Rs 1.9 lakh a kg in the spot market, making it difficult for mithaiwalas and halwais to procure high-grade variants. This shortage has led some shops to rework their designs to reduce the use of silver without affecting the visual appeal of their sweets.

Key Takeaways:

  • The price of silver has reached Rs 1.9 lakh a kg in the spot market, affecting the procurement of high-grade variants for sweet shops.
  • Delhi-based Khoya Mithai is reworking design detailing on some of its sweets to reduce the use of silver without affecting visual appeal.
  • The company has diversified its sourcing to mitigate the impact of the silver shortage.
  • India is feeling the pinch of the global silver shortage, with a huge difference between the price of silver futures and the spot market price.
  • Several mutual fund houses have stopped taking money in their silver ETF's fund schemes.
  • Sweet shops in smaller towns have stopped using vark (tabak) on sweets altogether due to the unaffordability of silver.
  • The price of vark has increased to Rs 8 from Rs 5 last Diwali, and a pack now costs Rs 1,200 from Rs 750 before.
  • The GST cuts on sweets have been slashed to 5% from Sept 22, but the fluctuation in prices of commodities is hurting businesses.

Statistics:

  • Rs 1.9 lakh a kg: Price of silver in the spot market.
  • Rs 1.6 lakh: Price of silver futures for delivery in Dec.
  • Rs 1,200: Price of a pack (150 pieces) of sweets with vark.
  • Rs 750: Price of a pack (150 pieces) of sweets with vark last Diwali.
  • Rs 5: Price of vark last Diwali.
  • Rs 8: Current price of vark.

Sources:

  • Tapan Kumar Das, owner of Suruchi Sweets in West Bengal's Hooghly.
  • Sid Mathur, founder of Delhi-based Khoya Mithai.
  • Rahul Kalantri of Mehta Equities.
  • Bakhtyar K Irani, managing director at Mumbai-based Parsi Dairy Farm.
  • Shivam Bhagat, owner of Agra's Bhagat Halwai.