India imports nearly 700–800 tonnes of gold annually, resulting in significant foreign exchange outflows and pressure on the current account deficit. Photo Credit: K_MURALI_KUMAR
Malabar Gold & Diamonds has submitted a comprehensive proposal to the Government recommending strategic enhancements to the Gold Monetization Scheme (GMS). The jeweler appealed for responsible gold consumption and the need to strengthen the country’s economic resilience through better utilization of domestic gold resources.
The proposal was submitted by MP Ahammad, Chairman, Malabar Group, to the Finance Minister Nirmala Sitharaman and Commerce & Industry Minister Piyush Goyal. It outlines practical measures aimed at increasing public participation in GMS, mobilizing idle gold into the formal economy, and encouraging greater recycling, reuse, and circulation of existing gold within India.
India imports nearly 700–800 tonnes of gold annually, resulting in significant foreign exchange outflows and pressure on the current account deficit. At the same time, Indian households and institutions are estimated to hold nearly 25,000–35,000 tonnes of gold in the form of jewellery, coins and bars, much of which remains economically idle.
The company emphasized the need to focus on recycling, exchange, re-use, and monetization of existing domestic gold that can play an important role in reducing import dependency, limiting dollar outflow, and strengthening the Indian economy over the long term.
Ahammad said: “With appropriate policy support and active integration of the organized jewelery sector, the Gold Monetization Scheme can emerge as a highly effective mechanism for mobilizing idle gold into the formal economy.”
While the Gold Monetization Scheme was introduced to reduce import dependence and monetise idle domestic gold holdings, the proposal noted that public participation remained limited due to longer lock-in periods, lower perceived returns, limited redemption flexibility, and procedural challenges.
To improve effectiveness and adoption of the scheme, it recommended integration of organized jewelers into the GMS framework under regulatory oversight; reduction in minimum deposit quantity from 10 gm to 1 gm; flexible redemption options in either gold weight or cash; lower lock-in periods and improved liquidity options and so on.
The proposal also recommends a jeweller-assisted collection and facilitation framework operating under bank and regulatory supervision, with digital tracking systems and transparent processing mechanisms to improve customer confidence and operational efficiency.
The mobilization of even 1–2 per cent of India’s domestic gold holdings could potentially release nearly 600–700 tonnes of gold into circulation, equivalent to a substantial portion of the country’s annual gold import demand.
Published on May 13, 2026