Gold prices in India have moderated significantly, with domestic gold prices falling 3.7% as of June 15 while international prices were down 4.2% from the end of May. The decline was largely attributed to a 5% rupee depreciation against the dollar and the government's decision to raise import duty on gold and silver to 15%. This latest price movement follows a 2% surge in previous sessions when gold prices rose to ₹6,950 per gram for 24-carat and ₹6,380 per gram for 22-carat gold. The price correction has coincided with a dramatic increase in gold recycling activities, with industry estimates indicating that several hundred tonnes of old gold are recycled annually in India, up from around 75% of business at major retailers previously.
The exchange of old gold jewellery for new purchases has gained significant momentum as consumers respond to the price correction. According to The Hindu BusinessLine, most leading retailers have launched targeted old gold exchange programmes to attract consumers, with anecdotal evidence suggesting that the share of business from exchange of old gold has risen between 5-15% and accounts for as much as 60-70% of sales. Rajesh Rokde, Chairman of All India Gem and Jewellery Domestic Council, noted that since Prime Minister Modi's appeal, awareness regarding gold recycling and exchange has increased significantly. The trend extends across organised retail, with Senco Gold & Diamonds reporting that around 50% of sales now come through gold exchange, as reported by Mint. Walk through Mumbai's Zaveri Bazaar and Chennai's T Nagar, and small stores prominently advertise "Old gold exchanged here," with these specialised exchange stores seeing steadier customer traffic than stores showcasing fresh collections.
The transformation follows Prime Minister Narendra Modi's appeal on 10 May to reduce gold purchases to help conserve foreign exchange reserves amid West Asia conflict-driven price surges. Three days later, the government raised the effective import tax on gold and silver to 15%, reversing duty cuts announced two years ago. As reported by The Hindu BusinessLine, the industry has witnessed a steady rise in old gold collection through jewellers, refiners and exchange programs, with the rise in jewellery recycling coming little more than a month after Modi's call to consumers to cut down on jewellery purchase and promote recycling old gold for fresh purchases. According to Surendra Mehta of India Bullion & Jewellers Association, "Investment demand had fallen when the duty was hiked" as people were hesitant to keep investing at such high rates. A retailer in Zaveri Bazaar noted that more customers are exchanging gold coins for jewellery or cash, with many customers like Tanzim Farooqui redeeming gold coins when funds are needed.
Despite policy challenges, major retailers are demonstrating resilience through aggressive growth targets and successful recycling initiatives. According to The Hindu BusinessLine, Tanishq reported that 4.4 lakh customers have responded by exchanging over 10 tonnes (worth over ₹1,200 crore) of gold in the short period since the appeal. Suresh Krishnan, VP-Sales at PNG Jewellers, said the newly launched nationwide initiative "Swarna Swaraj" to promote recycling across all company showrooms has delivered good response. "Historically, old gold exchanges and recycling accounted for roughly 25-30% of our consumer transaction mix. In recent quarters, that share has nearly doubled to 50-60% of our retail sales composition," Krishnan noted. While analysts expect the Indian organised gold jewellery retail sector to see sales volume decline a further 13-15% on-year this fiscal due to high gold prices and recent policy measures, the recycling surge provides a positive offset to traditional sales challenges.
India's gold imports fell by $2.21 billion to $3.42 billion in May 2026, down from $5.63 billion in April 2026, marking a sharp month-on-month decline. However, it represents a 34% year-on-year jump and the World Gold Council estimates combined jewellery and bar and coin demand could decline by around 50-60 tonnes, around 10% lower than the previous year due to import duty hikes. Retailers are now facing inventory challenges, with Rahul Guha of Crisil Ratings noting that "as of now, we think we are anticipating that there could be 30-40 days of incremental inventory or incremental stock that could be lying with these players." Inventory turnover days have moved to 170-180 days from the 140-150 days which is the usual industry standard. The recycling surge provides a natural solution to these inventory challenges while supporting the government's import reduction goals.
