India's Household Gold Stock Seen as Key to Reducing Import Bill

India's household gold stock is seen as a solution to the country's import dependence on the metal, according to Mayank Sharma, President and Head of Gold Loans at IIFL Finance. The company's president believes that recycling household gold is the fastest way to cut India's import bill, echoing Prime Minister Narendra Modi's recent appeal for Indians to hold off buying new gold for a year.

India's gold imports have been putting pressure on foreign exchange reserves and widening the current account deficit, Sharma said. The country is estimated to hold tens of thousands of tonnes of gold in private hands, much of which does not currently circulate through the formal economy.

IIFL Finance's data shows that a leading gold jeweller has seen close to 80% of its gold demand met through customers exchanging old stock, reflecting how deeply recycling has embedded itself in retail gold buying. A newer generation of buyers is also increasingly seeking clarity on the provenance of their gold, signalling that responsible sourcing is becoming a mainstream expectation.

Gold loans have emerged as an efficient way to keep gold liquid and productive without removing it from the economy, Sharma said. This model has become a dependable bridge to credit for MSMEs that often lack formal collateral.