What Is the Proposed Gold Overhaul?
For years, various government bodies and industry experts have called for a comprehensive national gold policy. The goal is to move beyond short-term measures like import duties and create a structured framework for the world's second-largest gold market.
While no single, all-encompassing bill has been finalised, the 'overhaul' refers to a collection of proposed and ongoing regulatory changes. Key among these are a revamped Gold Monetisation Scheme (GMS) to unlock household gold, establishing a formal framework for digital gold, and creating a national gold exchange. The overall aim is to treat gold as a financial asset, increase transparency, and better integrate the estimated 25,000 tonnes of gold held by Indian households into the formal economy.
Why Is This Overhaul Happening Now?
The push for a new gold policy is driven by significant economic pressure. India imports around 86% of its gold, making it a major component of the country's import bill. Amid recent global uncertainty and rising energy costs, this has put a strain on foreign exchange reserves and the rupee. In fiscal year 2026, India imported less gold by volume than the previous year but paid 24% more for it, a clear sign of the financial burden. In response, the government has taken several steps, including raising the import duty on gold to 15% and the Prime Minister appealing directly to citizens to postpone gold purchases. These are seen as temporary fixes, while a comprehensive policy is viewed as the long-term solution to reduce import dependency by mobilising domestic gold.
The Hold-Up: What’s Causing the Delay?
Despite the urgency, finalising the rules has proven complex. One of the biggest initiatives, the revamp of the Gold Monetisation Scheme, has been discussed for months but official notification is still awaited. Proposed changes include allowing trusted family jewellers to act as collection partners for banks, a move intended to overcome the trust deficit that hampered the original scheme. However, implementing this requires building a robust system for collection, purity verification, and incentives for both jewellers and consumers. Similarly, creating a regulatory framework for the booming digital gold market involves coordination between the Ministry of Finance, the RBI, and SEBI, each with different jurisdictions. These structural changes require careful planning to ensure consumer protection and prevent loopholes, contributing to the deliberative pace.
Impact on the Jewellery Industry
The lack of final rules, combined with recent government measures, has left the jewellery industry in a state of flux. The sharp increase in import duties and the public appeal to curb buying have panicked many jewellers, who fear a significant drop in demand. Industry associations have pushed back against what they term "demand destruction," arguing that it threatens the livelihoods of millions, from artisans to retail workers. Instead, they are advocating for policies that encourage recycling and the use of existing domestic gold. Some jewellers report that fresh purchases have already dipped, with more customers seeking to remodel or exchange old family heirlooms rather than buying new pieces. There are also concerns that high import duties could fuel a grey market for gold, undermining the government's goal of transparency.
What Does This Mean for You?
For the average consumer and investor, the current situation is one of watching and waiting. The cost of buying new gold jewellery is higher due to the increased import duty. This has led many families, particularly those planning for weddings, to consider repurposing older jewellery. While the government is signalling a future where idle gold can earn interest through a more accessible monetisation scheme, the final details remain unclear. Many households remain hesitant to part with inherited jewellery due to sentimental value and concerns about the melting and documentation process. The proposed regulations for digital gold aim to offer better investor protection, but until they are law, this segment operates in a regulatory grey area. The shift towards using existing gold may also mean that exchange programs at local jewellers become more attractive.
