The All India Jewellers & Goldsmith Federation (AIJGF) on Monday urged the government to prioritise domestic gold mobilisation and recycling over discouraging gold purchases, cautioning that a sharp fall in demand could threaten millions of livelihoods linked to the jewellery sector, according to a PTI report.
Background of the Appeal
The federation's appeal came a day after Prime Minister Narendra Modi called on citizens to postpone gold purchases as part of broader measures to ease pressure on India's foreign exchange reserves amid global supply disruptions caused by the West Asia conflict. In a letter to Commerce Minister Piyush Goyal, AIJGF national president Pankaj Arora acknowledged the importance of protecting foreign exchange reserves but argued that reducing consumer demand for gold without creating structural alternatives could severely harm the jewellery ecosystem.
“While the intention of protecting India's foreign exchange reserves is understandable, the solution should not be demand destruction. The solution should be domestic gold mobilisation, recycling and productive circulation of India's idle gold stocks,” Arora said, as quoted by PTI.
Impact on Livelihoods
The federation highlighted that the jewellery sector supports nearly 35 million livelihoods across manufacturing, retail, and artisan networks, and warned that weaker consumer sentiment could lead to reduced footfalls and manufacturing orders. “This is not merely a gold trade issue. This is a livelihood issue,” the AIJGF stated.
Gold in India is widely regarded as household savings and financial security rather than discretionary luxury spending. “For millions of Indian families, jewellery is not speculation, it is savings in wearable form,” Arora wrote.
Proposed Measures
To address the situation, the AIJGF proposed several measures:
- Establishing a dedicated bullion bank within the GIFT-IFSC or India International Bullion Exchange framework to mobilise idle domestic gold and reduce import dependence.
- Allowing gold ETFs to lend part of their physical holdings through a regulated bullion banking mechanism.
- Revamping the Gold Monetisation Scheme launched in 2015, which the federation argued had failed to achieve scale.
- Introducing dematerialised bullion deposit certificates, GST-neutral gold transfers within the system, and a national dashboard to track gold mobilisation and import substitution.
Potential Impact on Imports
India remains one of the world's largest gold consumers and holds one of the largest privately owned gold reserves globally. The federation estimated that an effective domestic bullion mobilisation framework could eventually reduce annual gold imports by 200-300 tonnes.
“Suppressing jewellery demand can hurt employment, but mobilising domestic gold can save foreign exchange without destroying livelihoods,” the AIJGF said, urging the government to hold inter-ministerial consultations on the issue.
