12 July, 2023


Given India’s large stock of household gold savings, monetising gold effectively will remain key to reducing import dependency. To do this, ensuring the success of GMS will be imperative, both for the government and the industry. With gold ever vulnerable to rising import duties in India, increased participation in GMS is perhaps the only long-term solution to mitigate the adverse impact of gold imports on India’s CAD. 

The increasing share of organised players is extremely positive news for financial inclusion. This will enable better access to credit for a large population of India who have previously had to rely on unorganised sources for their financing needs. 

In the coming years the rising penetration of the banking sector across India could act as a headwind to the growth of the loan against jewellery industry as consumers increasingly secure access to other forms of credit, such as personal loans. That said, given that personal loans are not collateral-backed, the banking system will always find it preferable to provide loans against gold as their associated credit risk is much lower. 

We expect organised players to see their market share grow, potentially securing half of the overall market in the next five years. If the gold spot exchanges can develop gold-backed financial products, these too will likely provide impetus to the financialisation of gold in India. 

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