AIJGF Pushes Bullion Bank Framework to Ease Gold Imports

Tue May 19 2026

India’s jewelry industry is pushing for urgent financial reforms as the All India Jewellers & Goldsmith Federation called on the central government to establish a structured bullion banking framework aimed at reducing the country’s heavy reliance on gold imports. In a detailed letter submitted to Union Commerce and Industry Minister Piyush Goyal, the federation emphasized that mobilizing idle domestic gold reserves could significantly strengthen the economy while supporting millions of livelihoods tied to the jewelry sector. Industry leaders believe the proposal has become increasingly important as India faces global economic uncertainty, volatile markets, and pressure on foreign exchange reserves.

The federation argued that discouraging gold purchases during uncertain financial conditions may create unintended consequences for workers and businesses that depend on the country’s massive jewellery trade ecosystem. “Any broad sentiment against gold purchases may unintentionally impact the livelihoods of nearly 3.5 crore Indians directly or indirectly dependent on the jewellery ecosystem”, the AIJGF says in the letter. Experts within the sector say gold continues to hold deep cultural, financial, and emotional value for Indian households, especially in rural communities where physical assets often serve as long-term savings and financial security.

According to the industry body, India already possesses one of the world’s largest privately held reserves of domestic gold reserves, yet much of this wealth remains locked away in homes and personal collections instead of being circulated productively within the formal economy. The federation pointed out that previous government initiatives, including the Gold Monetisation Scheme, failed to achieve meaningful scale due to limited public participation and lack of awareness. By creating a formal bullion banking system, industry stakeholders believe dormant gold assets could be integrated into the financial system while reducing the need for fresh imports.

The proposed framework would reportedly be linked to the India International Bullion Exchange and the GIFT-IFSC financial ecosystem, creating a more transparent and regulated channel for gold circulation within the country. Supporters of the plan say such a system could provide jewellers, manufacturers, and refiners with a stable domestic gold supply while improving overall efficiency across the precious metals market. Analysts also believe that reducing import dependence may help India better manage trade deficits and reduce stress on foreign exchange reserves during periods of international market instability.

Industry representatives stressed that the country’s gold imports are deeply connected to a broad economic network that supports artisans, polishers, hallmarking centers, refiners, transport operators, exporters, and thousands of small family-owned jewelry businesses spread across urban and rural India. Many of these workers rely entirely on consistent demand within the gold sector, making the industry one of the country’s largest employment generators outside agriculture. Federation members warned that any disruption in consumer confidence surrounding gold purchases could ripple across the wider economy and affect millions of households dependent on the sector.

As part of its recommendations, the federation also proposed allowing regulated lending of physical gold held by gold exchange-traded funds to improve market liquidity and strengthen domestic availability for manufacturers and retailers. The organization further called for restoring medium- and long-term gold deposit schemes while creating a dedicated working group involving regulators, ministries, and industry stakeholders to oversee the development of a transparent gold lending ecosystem.

Experts believe these reforms could modernize India’s bullion market, encourage formal financial participation, and position the country as a stronger global player in the evolving precious metals economy.

Source: https://www.siliconindia.com/