THEBUSINESSBYTES BUREAU

MUMBAI, MAY 13, 2026

Malabar Gold & Diamonds has submitted a comprehensive proposal to the Government of India recommending strategic reforms to the Gold Monetisation Scheme (GMS), extending its wholehearted support to Prime Minister Narendra Modi’s appeal for responsible gold consumption and enhanced utilisation of domestic gold resources to strengthen India’s economic resilience.

The proposal was submitted by M.P. Ahammad, Chairman of Malabar Group, to Union Finance Minister Nirmala Sitharaman and Union Commerce & Industry Minister Piyush Goyal. It outlines practical measures aimed at increasing public participation in the Gold Monetisation Scheme, mobilising idle gold into the formal economy, and encouraging greater recycling, reuse, and circulation of existing gold within India.

India imports nearly 700–800 tonnes of gold annually, resulting in substantial foreign exchange outflows and mounting pressure on the current account deficit. Simultaneously, Indian households and institutions are estimated to hold nearly 25,000–35,000 tonnes of gold in the form of jewellery, coins, and bars, much of which remains economically idle.

Malabar Gold & Diamonds emphasised that greater focus on recycling, exchange, reuse, and monetisation of existing domestic gold could play a transformative role in reducing import dependency, limiting dollar outflow, and strengthening the Indian economy over the long term.

Commenting on the proposal, M.P. Ahammad, Chairman, Malabar Group, said: “India possesses one of the world’s largest privately held gold reserves while continuing to rely significantly on imports to meet domestic demand. We wholeheartedly support the Hon’ble Prime Minister’s appeal and believe that encouraging responsible utilisation, recycling, and circulation of existing gold within the country is an important national priority. With appropriate policy support and active integration of the organised jewellery sector, the Gold Monetisation Scheme can emerge as a highly effective mechanism for mobilising idle gold into the formal economy.”

The proposal observed that although the Gold Monetisation Scheme was introduced to reduce import dependence and monetise idle domestic gold holdings, public participation remained limited due to longer lock-in periods, lower perceived returns, limited redemption flexibility, and procedural complexities.

To improve the effectiveness and adoption of the scheme, Malabar Gold & Diamonds recommended integrating organised jewellers into the GMS framework under regulatory oversight, reducing the minimum deposit quantity from 10 grams to 1 gram, introducing flexible redemption options in either gold weight or cash, lowering lock-in periods, improving liquidity options, and simplifying Aadhaar-based e-KYC procedures. The proposal also suggested customer incentives through jeweller participation, including loyalty-linked benefits, enhanced transparency in purity testing, valuation and refining, consideration of GST waiver on gold brought back into the formal system, and alignment of GMS with Gold Metal Loan frameworks for better industry utilisation.

Additionally, the proposal advocated for a jeweller-assisted collection and facilitation framework operating under bank and regulatory supervision, supported by digital tracking systems and transparent processing mechanisms to enhance customer confidence and operational efficiency.

According to the proposal, mobilisation of even 1–2 per cent of India’s domestic gold holdings could potentially release nearly 600–700 tonnes of gold into circulation, equivalent to a substantial share of the country’s annual gold import demand.

Malabar Gold & Diamonds said that encouraging recycling, reuse, exchange, and monetisation of existing gold within India could emerge as a significant economic lever for the country. The company added that a stronger and more accessible Gold Monetisation Scheme would help reduce import dependence, lower foreign exchange outflows, improve circulation of domestic gold resources, and contribute towards building a more resilient and self-reliant economy in line with the Prime Minister’s vision.