Amid Prime Minister Narendra Modi’s call to conserve forex reserves, the All India Jewellers and Goldsmith Federation has proposed setting up a dedicated bullion bank within the GIFT-IFSC or India International Bullion Exchange framework to act as a central institution for mobilising, standardising, lending and settling domestic gold.
The federation also called for allowing gold ETFs to lend up to 20-30 per cent of their physical holdings through a regulated bullion bank framework, and suggested a revamp of the government’s gold monetisation scheme, which it said had failed to achieve scale since its 2015 launch due to structural weaknesses.
Other proposals included dematerialised bullion deposit certificates usable as loan collateral, tax and GST neutrality for intra-system gold transfers, and a national dashboard to track gold mobilisation and import substitution.
India has one of the largest privately held gold stocks in the world. The federation estimated that a well-designed bullion bank framework could reduce annual gold import dependence by 200-300 tonnes over time.
How gold imports impact forex reserves?
India’s gold imports rose over 24 per cent to an all time high of USD 71.98 billion in 2025-26. It was USD 58 billion in 2024-25, USD 45.54 billion in 2023-24, USD 35 billion in 2022-23, USD 46.14 billion in 2021-22, USD 34.62 billion in 2020-21, and USD 28.2 billion in 2019-20.In volume terms, however, it dipped 4.76 per cent to 721.03 tonnes in 2025-26 from 757.09 tonnes in 2024-25. It was 795.2 tonnes in 2023-24 and 678.3 tonnes in 2022-23.
India is the world’s second-biggest gold consumer after China. The imports are largely driven by the jewellery industry. Traditionally seen as a safe-haven asset during periods of geopolitical uncertainty, gold demand in India tends to surge when global risks rise.
According to the commerce ministry, gold import increased is driven by the rise in prices from USD 76,617.48/KG (FY25) to USD 99,825.38/KG (FY26). The prices of the precious metal in the national capital is hovering around Rs 1.5 lakh per 10 gms. In April last year, it had crossed Rs 1 lakh for the first time.
Higher imports of the precious metal put pressure on the country’s trade deficit and foreign exchange outgo.
The rise in imports has pushed the country’s trade deficit (difference between imports and exports) to USD 333.2 billion during 2025-26.
The imports have implications for India’s current account deficit (CAD).
India’s CAD rose to USD 13.2 billion, or 1.3 per cent of GDP, in the December quarter from USD 11.3 billion in the year-ago period, mainly due to a higher trade deficit caused by a decline in exports to the US, according to RBI data released on March 2.
The precious metal accounts for over 9 per cent of the country’s total imports. India’s imports in 2025-26 was USD 775 billion.
