While the government has put a series of restrictions to curb gold imports, it is silver that is ruling the roost. During the April-June quarter, import of silver rose 311 per cent to $1.78 billion, compared with $433.8 million in the corresponding period of last year due to a surge in demand.

According to traders and economists, restrictions on gold have drifted the general sentiment towards silver as they feel it is the closest substitute for gold. "Ever since the government has started putting measures to curb gold imports, demand for silver has seen a sudden surge. Moreover, there is a general scare in the market that the government might soon start curbing silver imports also, as a result, traders are stocking up silver," said Monal Thakkar, president of Amrapali Industries, a leading Ahmedabad-based stock and commodity broking house.

Thakkar added such a staggering rise in silver import could also be attributed to a substantial rise in demand for silver jewellery as well silver crockery. "People are buying silver as a viable investment option," he added.

According to Sudheesh Nambiath, analyst at Thomson Reuters GFMS, India's total silver imports have more than doubled from last year, crossing 4,000 tonnes in the first eight months of 2013 compared to 1,900 tonnes in the whole of 2012. "Because of the restrictions on gold, traders shifted towards silver," Nambiath said.

He added that even by mid of the year manufacturers already had full order books through to December, a clear indication of stocking and also higher demand expectation from fabricators. Indian imports had increased at a fast pace taking advantage of lower prices, however imports dropped to just over 300 tonnes in August. It suggests that investors and bullion traders were refraining from further imports after price crossed Rs 55,000 a kg. Also delivery of near 75 tonnes to the MCX together in the July and Sept contract, only reaffirms the strong participation from investors and traders this year.

Anis Chakravarty, senior director, Deloitte India said silver import was basically offsetting the demand for gold as it was a safer option.

An industry veteran who is active in exports, however, said with RBI's restrictions on gold imports, round tripping of gold has come to a halt and some players, mainly export houses, who were active in gold round-tripping, seem to have shifted to silver.

Round-tripping means re-exporting silver without much value addition and export houses do so to maintain higher export volumes which allow them to retain status of a star trading house.