Till now, Indian fund houses were only allowed to launch ETFs for one commodity: gold. But SEBI has now approved the idea of launching ETFs for silver as well.
Now, SEBI has made it clear that silver ETFs will be launched with certain safeguards that are in line with the existing regulatory mechanism for Gold ETFs. So, as with gold ETFs, AMCs will also have to back-up their silver ETFs with physical silver as well.
As of now, silver in India is generally bought in physical form, via derivative instruments, or through overseas broking accounts.
I am sure you can guess the problems with physical purchase. One is, of course, that of purity. The other factor is storage. For the same amount of money, you get a lot more silver (grams) than what you get in gold. So, like a gold ETF, the silver ETFs too will provide liquidity and convenience, as the ETF structure takes care of storage and purity issues.