Gold Industry Suggests Fresh Roadmap To Reduce Imports And Strengthen Domestic Economy

In response to Prime Minister Narendra Modi’s appeal to curb gold imports and overseas spending, leading Indian bullion and jewellery industry associations have presented a new proposal to the Government and the Reserve Bank of India. The initiative is designed to reduce India’s trade deficit by unlocking the enormous reserve of nearly 30,000 tonnes of gold currently held by Indian households.

The proposal comes at a time when India’s gold imports surged by 24% to an all-time high of $71.9 billion during FY 2025-26, with more than 721 tonnes of gold imported into the country.

Proposed Two-System Model

The Precious Metals Refineries Forum (PMRF) has recommended a dual-channel framework for gold management:

For Exporters: Imported gold should be reserved exclusively for jewellery exporters through one-year Gold Metal Loans (GML).
For Domestic Consumption: Local demand should be fulfilled entirely through recycled household gold collected from citizens, refined within India, and redistributed through jewellers and retailers.

Under the suggested structure, individuals depositing idle gold could receive interest returns of 2% to 2.5%, while businesses availing gold loans may pay interest rates ranging from 3% to 4%.

Addressing Gaps In Earlier Gold Schemes

Industry leaders believe previous gold monetisation initiatives struggled mainly because local jewellers were excluded and there was insufficient banking integration. The absence of a well-connected ecosystem also exposed institutions to significant risks arising from fluctuations in gold prices.

To overcome these issues, trade organisations have proposed a more integrated framework that includes:

Active participation of trusted local jewellers, considering that nearly 10% to 20% of household gold holdings are in the form of bars and coins.
Strong banking support along with secure storage vault infrastructure nationwide.
Tax reforms, including removal of the 3% GST loss incurred when physical gold is converted into Electronic Gold Receipts (EGR), along with income tax benefits on earned interest.

Strong Backing From Industry Stakeholders

According to industry experts, the infrastructure required for implementation is already largely in place. Collection and purity-testing centres have indicated that household gold can be processed within 48 hours and securely transferred to bank-authorised vaults.

Representatives of the Indian Bullion and Jewellers Association (IBJA) recently met officials from the Reserve Bank of India to accelerate discussions and push for faster implementation of the proposed measures.