India's gold imports have reached a critical level, prompting industry bodies to propose comprehensive recycling and monetization solutions. According to reports from The Economic Times, gold imports surged 24% to a new high of $71.9 billion in 2025-26, with the country importing over 721 tonnes last fiscal. The Precious Metals Refineries Forum (PMRF) has suggested a mechanism to provide one-year gold metal loan (GML) from imported gold to jewellery exporters, while extending GML from locally refined bullion to domestic jewellers and retailers to meet local demand.
The surge in gold imports coincides with a broader rally in global gold prices, driven by geopolitical tensions and upcoming economic data. As reported by The Economic Times, U.S. gold futures for June delivery gained 0.8% to $4,768.20, reflecting investor concerns over fragile ceasefire negotiations with Iran. U.S. President Donald Trump stated that a ceasefire with Iran was "on life support" after Tehran's response to a U.S. proposal to end the war made clear the two sides were still far apart on multiple issues. Markets are also watching Trump's two-day visit to China this week, where he is set to meet Xi Jinping to discuss various topics including the Middle East conflict.
The PMRF has outlined specific interest rate structures for the proposed gold monetization program. As reported by The Economic Times, depositors could be offered 2-2.5% on gold deposits, while the GML interest would be pegged around 3-4%. The organization suggests a seamless funding mechanism requiring small tweaks in indirect tax to ensure GST refund when physical gold is converted to electronic gold receipts (EGR) held by households depositing their idle gold. James Jose, president of PMRF, noted that the 3% notional loss of GST amount on conversion currently puts off customers, suggesting the government could recover tax when EGR is converted back into physical gold.
The industry estimates significant untapped potential in household gold holdings. According to The Economic Times, over 30,000 tonnes of gold is currently with Indian families, representing a substantial asset base that could be mobilized through institutional mechanisms. Rajesh Rokde, chairman of All India Gem and Jewellery Domestic Council (GJC), explained that approximately 10-20% of gold with families would be in bullion form, with most owners expecting prices to rise rather than selling. The collection and purity testing centres have assured that gold can be processed within 48 hours and moved to secured vaults empanelled by banks.
