Recycling Household Gold Seen as Fastest Way to Cut India's Import Bill

India's household gold stock is a potential solution to the country's import dependence on the metal, according to Mayank Sharma, President and Head of Gold Loans at IIFL Finance. In an opinion piece supporting Prime Minister Narendra Modi's recent appeal to Indians to hold off buying new gold for a year, Sharma argued that recycling and reusing existing gold is the fastest way to cut India's import bill.

The country's gold imports put pressure on foreign exchange reserves, widen the current account deficit, and consume foreign exchange needed for other national priorities. With an estimated tens of thousands of tonnes of gold in private hands, most of which does not currently circulate through the formal economy, Sharma suggested that industry is beginning to drive a shift towards recycling.

A leading gold jeweller has reported that close to 80% of its gold demand is now met through customers exchanging old stock. A newer generation of buyers is also seeking clarity on the provenance of their gold, indicating that responsible sourcing is becoming a mainstream expectation. The World Gold Council has argued at the policy level that responsible domestic mining combined with organised recycling can meaningfully cut India's reliance on gold imports over time.

IIFL Finance's Mayank Sharma pointed to the efficiency of gold loans in keeping gold liquid and productive without removing it from the economy. When a household pledges 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.