India's Household Gold Stock Holds Key to Reducing Import Dependence

India's household gold stock holds the key to reducing the country's import dependence on gold, according to Mayank Sharma, President and Head of Gold Loans at IIFL Finance. In a recent appeal, Prime Minister Narendra Modi asked Indians to hold off on buying new gold for a year to ease pressure on foreign exchange reserves.

Sharma believes that recycling and reusing the gold Indians already own is a more structural opportunity than importing more gold. India's gold imports put pressure on the rupee, widen the current account deficit, and consume foreign exchange needed for other national priorities, Sharma said.

The country is estimated to hold tens of thousands of tonnes of gold in private hands, most of which does not currently circulate through the formal economy in an organised manner. A leading gold jeweller has reported that close to 80 per cent of its gold demand is now met through customers exchanging old stock.

IIFL Finance's Mayank Sharma also highlighted the emergence of gold loans as one of the most efficient ways to keep gold liquid and productive without removing it from the economy. When households pledge gold for credit instead of selling it, the gold stays within the country's stock while the credit unlocked supports working capital for small businesses, medical emergencies, education or farm input costs.

Taken together, organised recycling, responsible sourcing, credit against existing stock and financialisation, these trends point to a gold economy that draws more on India's existing reserves than on fresh imports. Sharma described this not as a call to stop buying gold but as a case for buying and using it differently, whether through exchanging old jewellery or opting for digital gold.