AIJGF urges Centre to create bullion bank framework to reduce gold import dependence

Tue May 19 2026

The All India Jewellers & Goldsmith Federation has urged the Centre to establish a formal bullion banking framework, arguing that such a system could help India lower its dependence on gold imports while strengthening the domestic jewellery trade and protecting millions of jobs linked to the sector.

In a letter sent to Union Commerce and Industry Minister Piyush Goyal on May 18, the industry body said India should prioritise mobilisation of idle domestic gold reserves instead of discouraging gold purchases at a time of global economic volatility and pressure on foreign exchange reserves.

According to the federation, the proposal assumes significance as India navigates geopolitical uncertainty and rising concerns around import bills. While backing the government’s broader objective of curbing avoidable imports, the organisation cautioned against creating negative sentiment around gold consumption.

“Any broad sentiment against gold purchases may unintentionally impact the livelihoods of nearly 3.5 crore Indians directly or indirectly dependent on the jewellery ecosystem,” the AIJGF said in the letter.

The federation noted that India’s jewellery industry sustains a vast ecosystem that includes jewellers, artisans, polishers, refiners, hallmarking centres, transporters and exporters spread across urban and rural markets. It added that gold jewellery continues to function as a traditional savings instrument and a form of financial security for households across the country.

The industry body argued that existing domestic gold reserves should be circulated more productively through institutional mechanisms. It pointed out that the government’s Gold Monetisation Scheme has not achieved meaningful scale despite India holding one of the world’s largest privately owned gold stocks.

As part of its recommendations, the federation proposed the creation of a bullion bank structure linked to the India International Bullion Exchange and the GIFT-IFSC ecosystem. It said such a framework could channel idle gold into the formal economy, reduce fresh import requirements and ensure transparent gold supply for jewellers and manufacturers.

The AIJGF also suggested allowing gold exchange-traded funds to lend a limited share of their physical gold holdings under a regulated system to improve domestic availability.

Additionally, the body called for the formation of a dedicated bullion banking working group comprising government ministries, regulators and industry stakeholders. It also sought restoration of medium- and long-term gold deposit schemes and the development of a transparent domestic gold lending ecosystem for the jewellery sector.

Source: https://www.storyboard18.com/