The Kerala Gold and Silver Merchants Association has urged the government to adopt a policy framework focused on recycling domestically held gold instead of discouraging gold purchases through higher import duties.
State General Secretary S. Abdul Nazar said that if effective gold recycling measures and a transparent bullion banking system are introduced, India could significantly reduce or even eliminate its dependence on gold imports, thereby saving substantial foreign exchange reserves while protecting employment in the jewellery sector.
According to him, India imports around 800 tonnes of gold annually at an estimated cost of ₹12 lakh crore. With gold increasingly functioning as a global financial asset, the government should frame policies that integrate the vast quantity of gold held within the country into the formal financial system rather than restricting consumer purchases.
Citing estimates by the World Gold Council, Nazar pointed out that approximately 2,19,890 tonnes of gold have been mined globally so far, of which an estimated 25,000–30,000 tonnes are held by Indian households, trusts and institutions — nearly 12 to 15 per cent of the world’s total gold reserves.
He said gold in India serves not only as jewellery but also as a source of savings, investment, security and livelihood for millions of families connected to the broader jewellery ecosystem. Proper utilisation of these domestic gold reserves could substantially curb imports.
Criticising the increase in gold import duty from 6 per cent to 15 per cent, Nazar warned that such measures could encourage smuggling. He pointed out that India imported nearly 1,000 tonnes of gold when the duty was previously at 15 per cent, whereas imports declined to below 800 tonnes when the duty stood at 6 per cent.
The 9 per cent increase in import duty had pushed up gold prices by around ₹10,200 per sovereign. According to him, smuggling one kg of gold could generate profits exceeding ₹20 lakh, while the addition of 3 per cent GST in the parallel market could raise illegal profits to nearly ₹24 lakh.