Gold mobilisation and recycling could ease India foreign exchange pressure, AIJGF says

The All India Jewellers & Goldsmith Federation (AIJGF) said domestic gold mobilisation and recycling could ease foreign exchange pressure. AIJGF warned against deferring gold purchases without a structural plan. The body said such moves could affect the jewellery trade and jobs linked to it. AIJGF estimates the ecosystem supports the livelihoods of 35 million people.

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Prime Minister Narendra Modi appealed on Sunday for citizens to postpone gold buying. The appeal aimed to protect foreign exchange reserves amid global supply chain disruption. AIJGF linked the disruption to the West Asia war. The federation said the concern over reserves and the rising import bill was understandable.

AIJGF gold mobilisation plan to protect foreign exchange

In a letter to Commerce Minister Piyush Goyal, AIJGF national President Pankaj Arora raised concerns. Arora said a broad public message could weaken demand sharply. "While the intention of protecting Indias foreign exchange reserves is understandable, the solution should not be demand destruction. The solution should be domestic gold mobilisation, recycling and productive circulation of Indias idle gold stocks,\" Arora said.

AIJGF said a sudden change in sentiment could cut store visits and new orders. The federation said small jewellers and artisans would face the greatest strain. It also warned of pressure on incomes across the supply chain. \"This is not merely a gold trade issue. This is a livelihood issue.\"

AIJGF gold mobilisation ideas for bullion bank and ETFs

AIJGF proposed a dedicated bullion bank as a central domestic gold institution. It suggested placing it within the GIFT-IFSC or the India International Bullion Exchange ecosystem. The federation said the bank could mobilise, standardise, lend, and settle domestic gold. It also urged a faster inter-ministerial consultation.

The federation suggested allowing gold ETFs to lend part of their metal. It proposed a 20-30 per cent lending limit through a regulated bullion bank structure. AIJGF also called for changes to the gold monetisation scheme. It said the scheme lacked scale since its 2015 launch due to structural weaknesses.

AIJGF gold mobilisation push through recycling and tracking

AIJGF proposed dematerialised bullion deposit certificates for use as loan collateral. It also sought tax and GST neutrality for gold moved within the system. The federation suggested a national dashboard to monitor mobilisation and import substitution. It said India holds one of the world’s largest privately owned gold stocks.

AIJGF estimated a strong bullion bank framework could cut import dependence over time. It said annual gold imports could fall by 200-300 tonnes with better mobilisation. The federation argued jobs suffer when demand is suppressed. It said mobilising domestic gold could save foreign exchange without harming livelihoods.

AIJGF also highlighted gold’s role in household finances and social customs. It said gold often acts as savings, wedding spending, and rural liquidity. \"For millions of Indian families, jewellery is not speculation, it is savings in wearable form,\" Arora wrote. The federation urged policy steps that reduce imports without discouraging legitimate buying.

With inputs from PTI