India's significant dependence on gold imports, coupled with an estimated 32,000 tonnes of gold held by households, has prompted industry leaders to advocate for policy changes to boost domestic gold recycling. Experts, speaking at the BT India's Most Sustainable Companies Summit and Awards, highlighted that current tax structures deter individuals from bringing their idle gold into the formal market.
Lowering Taxes to Unlock Dormant Gold
Keyur Shah, CEO of Muthoot Exim, emphasized that the existing 3% Goods and Services Tax (GST) on gold sales acts as a disincentive. "You buy gold there is 3 per cent GST. To sell gold also there is a 3 per cent GST. People may not want to part with ancestral jewellery. But there are lot of bars and coins that can be sold. One thing that stops them from selling it is this GST element," Shah explained. He believes slashing this GST could significantly increase gold recycling.
Beyond GST, Shah also suggested a temporary moratorium on capital gains tax for gold sales. "For some time, let's just remove capital gains tax on gold. There could be a moratorium period. This will open the door for people to come out with their gold," he added.
Import Duties and Market Dynamics
While the government recently raised import duties on gold, hoping to curb demand, experts like Ajay Mehra, MD of Mehrasons Jewellers, argue this approach is ineffective. Mehra noted that consumer demand for gold remains strong even at record high prices. He warned that increased import duties could inadvertently boost jewellery sales in markets like Dubai, with a significant portion of exported handmade jewellery from Dubai already classified as Indian.
"Give the industry an opportunity to perform at a level playing field to the international level. And you might see a huge turnaround," urged Ajay Mehra, advocating for import duties to be cut to zero.
Promoting Digital Gold and Future Outlook
Sugandha Sachdeva, Founder of SS WealthStreet, highlighted the potential of Electronic Gold Receipts (EGRs) as a means to integrate the physical gold market with formal financial markets. EGRs, which represent dematerialized ownership of physical gold stored in accredited vaults, began live trading on the National Stock Exchange in May.
The calls for reform come as gold prices continue their upward trajectory. Prices surged around 70% in 2025, and experts predict further increases. Keyur Shah believes prices could double in the next five years, while Sugandha Sachdeva forecasts them topping Rs 2 lakh within two years, underscoring the urgency of optimizing India's gold ecosystem through effective policy.