As geopolitical tensions continue to reshape the global economic order, India finds itself at a crucial juncture in re-evaluating its strategic resources, particularly its bullion policies. With its historical dependence on gold imports and a deeply entrenched cultural affinity for the yellow metal, India must consider the lessons emerging from its long-standing tensions with Pakistan and other regional and global fault lines.
The Indo-Pak conflict, marked by military standoffs, border skirmishes, and ideological divides, has consistently demonstrated how quickly peace can unravel in South Asia. In such a volatile environment, gold is traditionally seen as a safe haven. But for India which is the world’s second-largest consumer of gold, this reliance on bullion imports could morph into a liability if not strategically managed.
Bullion imports: A strategic vulnerability
India imports nearly all of its gold demand — over 700–800 tonnes annually — primarily from Switzerland, the UAE, and other global hubs. This dependency makes India highly vulnerable to global supply chain disruptions. India must diversify its bullion import sources and consider forming strategic bilateral agreements with multiple suppliers. Integrating bullion procurement with energy deals, similar to oil-for-gold agreements, could offer a buffer against dollar-denominated volatility and sanctions risks.
Domestic gold reserves and strategic stockpiling
The vast gold reserves of over 800 tonnes are seldom mobilised efficiently during crises. The country needs to establish a Strategic Bullion Reserve distinct from RBI’s monetary reserves, akin to the Strategic Petroleum Reserve. This could serve as a hedge during geopolitical crises or trade embargoes. Furthermore, incentivizing citizens to deposit idle gold into formal monetization schemes could help convert passive wealth into an active financial instrument during times of national need.
Bullion trade: Transitioning to strategic autonomy
India’s bullion market is largely driven by unorganized trade and influenced by international benchmarks. In conflict scenarios, especially involving sanctions or banking restrictions, reliance on foreign pricing and logistics channels could be detrimental. We need to accelerate the development of its own bullion exchange ecosystem. The India International Bullion Exchange (IIBX) launched in GIFT City is a step in the right direction. However, this needs deeper integration with domestic refineries, secure vaulting infrastructure, and rupee-denominated pricing mechanisms to achieve strategic autonomy.
Geo-financial diplomacy and sanctions resilience
Sanctions, currency devaluation, or trade embargoes could impact India’s ability to pay or trade for bullion. The country must expand bilateral settlement frameworks that allows for non-dollar gold trade. Building a multilateral precious metals settlement platform with BRICS, SCO, or ASEAN nations could also provide long-term insulation from Western-dominated sanction regimes.
Learning from the Indo-Pak conflict, the country needs a proactive, not reactive, posture. Gold must transition from being merely a consumer commodity to a national security asset backed by resilient imports, secure storage, autonomous trade, and robust policy infrastructure. The path to Atmanirbhar Bharat must run through vaults just as much as it does through factories.
The author is former President of the India Bullion & Jewellers Association (IBJA) and an entrepreneur