Gold Mobilisation Scheme: Gems And Jewellery Industry Urges Govt To Revitalise GMS

India has had a long-winding tradition of gold ownership. However, Prime Minister Narendra Modi has urged citizens to curb their gold purchases for the time being as the world grapples with the consequences of the West Asia conflict.

Amid the plea to curb gold purchases and no visible end to the conflict in West Asia, the gems and jewellery industry have pleaded with the government to revive the Gold-Mobilisation Scheme, according to reports.

What Is The Gold Mobilisation Scheme?

The 'All India Jewellers and Goldsmiths Federation' has requested the government to consider an overhaul of the gold mobilisation framework. The Gold Monetisation Scheme was introduced on September 15, 2015. The scheme sought to solve the import-related problem associated with buying gold, highlighted by Prime Minister Modi in his recent address. Notably, India’s gold import bill hit $71.98 billion (approximately Rs 6 lakh crore) for FY 2025-26.

The scheme also aimed at financialising the gold held by households. As a part of the scheme, gold owners were provided three options to invest their gold in gold deposits. Depositors could bring physical gold in any form, be it jewellery, coins, or bars, to a certified Collection and Purity Testing Centre (CPTC). Then the CPTC would melt and assess the purity of the gold, and the "fine gold" equivalent would be credited to a gold savings account. This scheme allowed the owner to earn interest on the weight of the metal rather than just letting it sit in a vault.

The first option was a short-term bank deposit with a tenure of one to three years; the second option was a medium-term government deposit with a tenure of five to seven years; and the third option was a long-term government deposit with a tenure of 12-15 years. However, the opening of new Medium- and Long-Term (MTGD/LTGD) deposits was discontinued in 2025 as the price of gold rose exponentially. The interest rates for the scheme ranged between 0.50 per cent and 2.50 per cent, depending on the tenure. All earnings under GMS were exempt from capital gains and income tax.

How Can GMS Benefit Indian Households?

Indian households hold a massive hoard of gold in the form of jewellery. Amid a steep rise in gold prices, the hoard is valued at nearly $5 trillion according to a report by Kotak Institutional Equities. This number exceeds India’s nominal GDP, which is estimated to be around $4.15 trillion. While the financialisation of this hoard via the reintroduction of the scheme can aid in the national objective of lowering the deficit, it is also likely to help individuals who hold physical gold.

Presently, storing physical gold in a locker is a cost. However, under this scheme, you earn interest based on the weight of the metal. If you deposit 100 grams, you get interest (typically 0.50 per cent – 2.50 per cent depending on the term) on that weight, and you benefit if gold prices rise during that period. The interest earned is tax-free.

According to the Economic Times’ report, the proposal from the GJC urges the government to allow gold owners to credit gold to a digital "demat" account via local jewellers, rather than just banks. This proposal seeks to make the process of financialising the gold easier. The industry body has also proposed a GST "tweak"; currently, converting physical gold into electronic receipts can trigger a 3 per cent GST loss, but the bodies are seeking for this tax to be deferred or waived until the gold is sold.

The proposed revamp and re-introduction of the GMS aims to make the scheme more accessible while allowing Indian households to keep their wealth in a secure, interest-bearing, and liquid digital format.  

Earlier in April, the All India Gem and Jewellery Domestic Council had announced that it was in talks with the Reserve Bank of India and the Ministry of Finance to undertake a revamp of the GMS.