Allow gold ETFs to unlock vaults

Thu May 14 2026

When the Prime Minister asks Indians to stop buying gold, it is not merely a moral appeal to household thrift; it is a warning signal from the macroeconomy. But gold does not obey sermons. The more anxious the nation becomes, the more instinctively Indians turn to the yellow metal — not as consumption, but as insurance. That is exactly the paradox now playing out: even as citizens are urged to pause gold purchases, fear has only sharpened their appetite for it.

The government’s response has been to raise import duties on gold and silver from 6 per cent to 15 per cent, hoping to cool demand and conserve foreign exchange. But tariffs only feed into raising the symptom; they do not treat the disease. If India wants to reduce the import intensity of gold investment without denying savers their preferred hedge, the next reform must come from within the financial market itself: Gold ETFs should unlock their vaults and be allowed to use exchange-traded futures as part of their portfolio architecture. That would convert part of India’s gold demand from a physical import problem into a financial risk-management solution.

In January 2026, gold imports amounted to $12 billion, nearly tripling December’s figure. Demand for gold ETFs accounted for 16 per cent of that monthly expenditure. Gold ETFs, designed to reduce India’s physical import burden, have become one of its major drivers. This irony is worth highlighting, and it also points to a potential solution

Source: https://www.thehindubusinessline.com/