Malabar Gold & Diamonds Proposes Reforms to India's Gold Monetisation Scheme

Bangalore, May 12, 2026: The jewellery retailer Malabar Gold & Diamonds has put forward a detailed proposal to the Government of India aimed at enhancing the Gold Monetisation Scheme (GMS), backing Prime Minister Narendra Modi's push for responsible gold consumption and strengthening India's economic resilience through more effective use of the nation's domestic gold reserves.

M.P. Ahammad, Chairman of Malabar Group, submitted the proposal to Finance Minister Nirmala Sitharaman and Commerce & Industry Minister Piyush Goyal. The recommendations focus on practical steps to increase citizen participation in GMS, channelise untapped gold reserves into the formal financial system, and foster greater recycling and circulation of gold within the country.

The country currently imports between 700 and 800 tonnes of gold annually, draining substantial foreign exchange reserves and straining the current account deficit. Yet Indian households and institutions hold an estimated 25,000 to 35,000 tonnes of gold as jewellery, coins, and bars—much of which generates no economic returns.

Ahammad noted that the company supports the Prime Minister's vision, stating: "India maintains one of the world's largest privately owned gold stockpiles while simultaneously depending heavily on imports to fulfil consumption needs. We stand behind the Hon'ble Prime Minister's appeal and regard the promotion of responsible use, recycling, and domestic circulation of gold as a critical national objective. With suitable policy frameworks and meaningful engagement from the organised jewellery sector, the Gold Monetisation Scheme has the potential to become a powerful tool for converting idle gold into productive assets within the formal economy."

The jeweller identified several obstacles limiting the scheme's uptake: extended lock-in durations, modest returns, limited flexibility in redemption options, and administrative hurdles. Launched to curb import reliance and tap into dormant gold reserves, the programme has failed to attract substantial public interest.

Malabar Gold & Diamonds has outlined a series of recommendations to improve the scheme's reach and effectiveness:

• Incorporate organised jewellery retailers into the GMS under proper regulatory frameworks
• Lower the minimum deposit threshold from 10 grams to just 1 gram
• Provide redemption choices allowing customers to receive either physical gold or cash
• Shorten holding periods and enhance liquidity mechanisms
• Streamline identity verification through Aadhaar-linked digital processes
• Introduce customer rewards via jeweller partnerships, including benefits tied to loyalty programmes
• Enhance clarity regarding purity assessment, pricing, and metal refinement procedures
• Explore potential tax relief on gold entering the formal economy
• Integrate GMS with Gold Metal Loan frameworks to maximise sector utility

The proposal additionally suggests establishing a jeweller-facilitated collection framework supervised by banks and regulators, incorporating digital monitoring and transparent handling procedures to strengthen customer trust and operational performance.

The company estimates that tapping merely 1 to 2 percent of India's domestic gold reserves could release approximately 600 to 700 tonnes of gold into active circulation—representing a significant share of the nation's yearly import requirements.

Malabar Gold & Diamonds contends that prioritising the recycling, reuse, and monetisation of existing gold supplies within India represents a meaningful economic opportunity. A more robust and user-friendly Gold Monetisation Scheme could meaningfully decrease import dependency, reduce currency outflows, enhance the movement of domestic gold resources, and strengthen India's economic independence consistent with the Prime Minister's development agenda.