Amid forex concerns, jewellers’ body asks govt to mobilise idle gold instead of curbing demand

Jewellery industry body All India Jewellers & Goldsmith Federation (AIJGF) on Monday urged the government to focus on domestic gold mobilisation and recycling instead of discouraging gold purchases, warning that any sharp fall in demand could hurt livelihoods linked to the sector, PTI reported.The federation’s comments came a day after Prime Minister Narendra Modi appealed to citizens to postpone gold purchases as part of broader measures aimed at reducing pressure on India’s foreign exchange reserves amid global supply disruptions triggered by the West Asia conflict.In a letter to Commerce Minister Piyush Goyal, AIJGF national president Pankaj Arora said protecting foreign exchange reserves was important, but reducing consumer demand for gold without creating structural alternatives could adversely impact the jewellery ecosystem.“While the intention of protecting India’s foreign exchange reserves is understandable, the solution should not be demand destruction. The solution should be domestic gold mobilisation, recycling and productive circulation of India’s idle gold stocks,” Arora said, PTI quoted.The federation said the jewellery sector supports nearly 35 million livelihoods across manufacturing, retail and artisan networks, and warned that weaker consumer sentiment could reduce footfalls and manufacturing orders.“This is not merely a gold trade issue. This is a livelihood issue,” it said.The AIJGF noted that gold in India is widely viewed as household savings and financial security rather than discretionary luxury spending.“For millions of Indian families, jewellery is not speculation, it is savings in wearable form,” Arora wrote.The federation proposed setting up a dedicated bullion bank within the GIFT-IFSC or India International Bullion Exchange framework to mobilise idle domestic gold and reduce import dependence.It also suggested allowing gold ETFs to lend part of their physical holdings through a regulated bullion banking mechanism and called for a revamp of the Gold Monetisation Scheme launched in 2015, arguing that the existing framework had failed to achieve scale.Other recommendations included dematerialised bullion deposit certificates, GST-neutral gold transfers within the system and a national dashboard to track gold mobilisation and import substitution.India remains one of the world’s largest gold consumers and also holds one of the largest privately owned gold reserves globally.The federation estimated that an effective domestic bullion mobilisation framework could eventually reduce annual gold imports by 200-300 tonnes.“Suppressing jewellery demand can hurt employment, but mobilising domestic gold can save foreign exchange without destroying livelihoods,” the AIJGF said while urging the government to hold inter-ministerial consultations on the issue.