## 1960s 1. The first gold bond scheme was introduced in _November 1962_. 2. In 1962, during the border conflict with China, the Government of India faced severe fiscal pressure and a drain on foreign exchange due to heavy gold imports. 3. To mobilise domestic savings and divert households away from physical gold, the government issued a 15-year Gold Bond in 1962, offering 6.5% simple interest, the proceeds of which were used for defence and support services. 4. It mobilised only 16.70 tonnes 5. The bond was part of a broader policy measure to discourage private gold consumption, which was worsening India’s balance of payments. 6. In the same year, the Morarji Desai, then Finance Minister of India, introduced the Gold Control Act, 1962, imposing restrictions on gold ownership and trade to curb imports. 7. The Gold Control Rules were announced on the January 10, 1963 as Part XII-A of the Defence of India Rules, under the Defence of India Act, 1962. **March 1965** 8. A second attempt to garner gold was made through the 7 per cent Gold Bond 1980 Scheme (March 1965) which could mobilise only 6.1 tonnes 9. On September 22, 1965, the Gold Control Act, 1965 was enacted. **October 1965** 10. On October 27, 1965, the third series designated as National Defence Gold Bonds, 1980 were opened for subscription. 1. It raised physical gold from citizens but offered significant benefits like tax immunity like no tax would be payable if the gold was acquired with un-disclosed income along with no capital gains tax upon redemption of bonds 2. Bonds were repaid in gold of .995 fineness on October 27, 1980. 3. It garnered 13.7 tonnes and the Gold Bond Scheme 1993 garnered 41 tonnes of gold. 11. As the measures were not proving to be effective, more restrictions were imposed with the Gold (Control) Act, 1968 which repealed the Gold (Control) Act, 1965 [^3], to tighten the controls on the possession, manufacture, and trade of gold. 1. It banned the making and selling of jewellery above 14 carats, making it compulsory for gold smiths to be licensed and submit accounts of all gold received and utilised by them etc. 2. The measures met with lot of resistance and criticism. This coupled with administrative complexities resulted in the failure of the Gold Control order. 3. Bullion imports and exports were also banned. 4. These restrictions led to massive gold smuggling and a growing black market (unofficial transactions) for gold and foreign exchange 5. Over-invoicing of imports and under-invoicing of exports in legal trade generated undeclared foreign exchange abroad. 6. This was used to pay for smuggled gold. In parallel, some hawala operators already held foreign currency overseas, allowing rupee payments to be settled in India without bank transfer or paper trail. Since gold was effectively a dollar-denominated asset, Indian buyers had to first indirectly acquire (pay for) foreign exchange through the illegal hawala market, often at a 40–60% premium over the official USD/INR rate. These high premia constituted the “large transaction costs incurred in purchase of foreign exchange” referred to by the RBI. 7. The rupee funds (cash) used to purchase this foreign exchange were typically undisclosed income, resulting in widespread tax evasion and significant loss of government revenue. Bribes were paid, cash use was rampant, corruption became systemic and a black economy thrived. 8. The existence of a large illegal FX market weakened RBI’s ability to control the forex market and widened the gap between official and unofficial exchange rates. 9. **1977** - Official imports to discourage smuggling was first mooted in 1977 but viewed against the forex reserves available then, it was thought as an impossible proposition. The Government decided to sell confiscated gold in small quantities through the RBI. However, it did not have any major impact on smuggling ## 1990s 1. June 6, 1990 - The 1962 Gold Control Act was abolished and superseded by the [Gold (Control) Repeal Act, 1990](https://www.indiacode.nic.in/repealedfileopen?rfilename=A1990-18.pdf) 2. The period from June 1990 marked the beginning of liberalisation of imports of gold. ### 1992 - NRI Gold Import Scheme 1. One fact which often gets ignored is that liberalisation of gold imports brought a large segment of unofficial gold imports and the illegal forex market into the official sector, and reduced large transaction costs associated with illegal foreign exchange. 2. India had severely restricted gold imports since the Gold Control Rules (1962) and later the Gold Control Act (1968), strongly backed by Finance Minister Morarji Desai. 1. The ==NRI Gold Import Scheme (1992) announced in the [1992-93 Union Budget](https://www.indiabudget.gov.in/doc/bspeech/bs199293.pdf) in February 1992 and Special Import License scheme (1994)== allowed NRIs to import gold legally. Its aim was not to reduce gold imports, but to shift them from illegal to legal channels, collapsing the hawala premium. 2. The NRI Gold Import Scheme (1992) allowed NRIs to import 5kg of gold per passenger with a modest import duty provided the gold as well as the import duty is financed from foreign exchange earned abroad. 3. Full liberalisation came later in 1997, when banks and nominated agencies (MMTC, STC, etc.) were allowed to import gold for domestic jewellers. 4. ==In fact, meaningful development of forex markets was enabled by this measure and consequently effectiveness of intervention in forex markets enhanced==. [^2] 5. A DRG study titled *Gold Mobilisation Instrument as an External Adjustment* was released by the RBI in 1992. ### 1993 - Gold Bond Scheme 1. The Gold Bond Scheme [(1993)](https://incometaxindia.gov.in/Communications/Circular/Others/910110000000000808/dtc49nl5.htm) reduced gold imports by allowing RBI to use domestically mobilised gold for reserves, eliminating the need to import equivalent amount of gold. 2. Individuals deposited physical gold with the government and received Gold Bonds. Interest was paid in rupees, principal amount matured in gold, viz., the same quantity deposited. About 1.3 million ounces (around 40 tonnes) were mobilized. They were also exempted from taxes or any punishment for holding illegal gold. 3. [The Gold Bonds (Immunities and Exemptions) Act, 1993](https://www.indiacode.nic.in/handle/123456789/1924?locale=en) was passed to provide bond buyers with immunity from any kind of inquiries or investigations under certain laws, such as the Income Tax Act, Wealth Tax Act (abolished in 2016), and Foreign Exchange Regulation Act (FERA). ### August 1995 - Standing Committee on Gold and Other Precious Metals 1. [[RBI_Report_199508_The Standing Committee on Gold and Other Precious Metals .pdf|Link to the report]] ### 1997 1. In [October 1997](https://www.indiabudget.gov.in/budget_archive/es97-98/chap65.pdf), the import policy for gold and silver was further liberalised. 2. Under this liberalised policy for import, 11 nominated agencies, including three state-owned companies (canalising agencies like MMTC, STC, HHEC) and eight banks, were authorised by the RBI to import gold and silver for sale to jewellery manufacturers, exporters, NRIs, holders of Special Import licences and domestic users [cf. paragraph 8.15 of Exim Policy 1997-2002]. 3. Gold Deposit Scheme (1997) 4. Even after two years of launching the scheme under the recent Gold Deposit Scheme (1997) the mobilization was around seven tonnes only. ### 1998 1. [March 6, 1998](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=1757&Mode=0#1) - RBI permitted the nominated agencies/banks to import gold ==under different arrangements==, besides outright purchase on Documents against Payment (D/P) basis (where shipping documents are released to the importer only after immediate payment, so the exporter is paid before the goods are taken delivery of). 1. The import of gold on loan basis was allowed for a maximum period of 180 days. 2. [December 31, 1998](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7701&Mode=0)- Nominated banks were permitted to ==lend grant gold (metal) loans ==as per Export Import Policy 1997-2002, *only to exporters of jewellery for a period of 120 days* from the date of release of gold on loan basis. The aim was to improve the supply of gold for exporters and boost the growth of the jewellery exports. ### 1999 - Gold Deposit Scheme 1. [September 14, 1999](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=80) - The Department of Economic Affairs, Ministry of Finance notified the Gold Deposit Scheme as announced in the Budget, 1999-2000. 1. It was formulated with a view to bringing privately held stock of gold in circulation, reduce the country’s reliance on import of gold and providing its owners with some income apart from freeing them from the problems of storage, movement and security of gold in their possession. 2. [October 5, 1999](https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=1796) - The detailed guidelines for same were announced by the RBI. ## 2000s 1. [October 1, 2003](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=1359&Mode=0) - ADs were advised that Letter of Credit (LC) for import of gold under the Nominated Agency Scheme must be established on behalf of the Nominated Agencies themselves and under no circumstances should the LC be issued on behalf of any other entity, even if a letter of authority issued by the Nominated Agency is furnished by these entities. 1. After this, it was clarified by Ministry of Commerce & Industry that as per the EXIM Policy 2002-2007, even Export Oriented Units (EOUs) in the Gem & Jewellery sector, and units in Special Economic Zones (SEZs) in the gems and jewellery sector were allowed to import gold directly or can also source gold through the existing nominated agencies. 2. ==With this only nominated agencies, approved banks and EOUs/SEZ units in gems and jewellery sector could directly import gold.== 3. EXIM Policy 2002-07 was a five-year framework (April 2002-March 2007) aiming for trade liberalization. 2. [May 18, 2004](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=1639)- Gold Card Scheme for exporters was worked out by the RBI, for credit worthy exporters with good track record for easy availability of export credit on best terms. 3. [May 27, 2004](https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=10174) - RBI announced the Gold Card Scheme for Exporters. 4. [July 9, 2004](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=1757&Mode=0)- ADs were allowed to open Letters of Credit and allow remittances on behalf of EOUs, units in SEZs in the Gem & Jewellery sector and nominated agencies, for direct import of gold, subject to conditions. 5. [December 1, 2004](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2132&Mode=0) - As per the Foreign Trade Policy (FTP) 2004-09, the maximum period of gold loan to jewellery exporters was 120 days (60 days for manufacture and exports from the date of release of gold on loan basis' + 60 days for fixing the price and repayment). On December 1, 2004, it was increased days to 240 days (60+180 days for fixing the price and repayment). 6. [February 18, 2005](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2132&Mode=0) - It gave clarifications regarding the tenor of importing gold on loan basis and opening of Stand-By Letter of Credit. 7. [September 5, 2005](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=2499&Mode=0) - On December 31, 1998, banks were allowed to give **gold (metal) loan only to jewellery exporters**. Now they could extend Gold (Metal) Loans to even domestic jewellery manufacturers, who are not exporters of jewellery, subject to the conditions but for a period of up to 90 days. The aim was to boost the domestic industry with help of gold financing. 8. March 19, 2007 - The first Gold Exchange Traded Funds (Gold-ETF), Gold BeES by Benchmark Assent Management Company, a Mumbai-based mutual fund house, was listed on NSE in India, after the Union Finance Minister in the[ Union Budget 2005-06](https://www.indiabudget.gov.in/budget_archive/ub2005-06/bs/speecha.htm) had announced the introduction of Gold Exchange Traded Fund (GETF) in India. 9. [April 3, 2007](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3387&Mode=0) - The tenor of gold (metal) loans to domestic jewellery manufacturers, who are not exporters of jewellery, was increased from 90 days to up to 180 days. 10. [May 8, 2007](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=3506) - The RBI restricted any arrangements with non-nominated banks/co-operative banks/ non-banking financial companies for retailing of imported gold/gold coins to prevent any misuse of the gold sales. 11. [15, October 2008](https://www.pib.gov.in/newsite/erelcontent.aspx?relid=45053&reg=3&lang=2), govt. announced that India's postal service, India Post, will start selling 24-carat gold coins through its post offices. ## 2011 1. Budget for 2011-12 - The government [levied](https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=81252&reg=3&lang=2) an excise duty of 1% on precious metal jewellery – but only on goods manufactured or sold under a brand name, effective from March 1, 2011. ## 2012 1. [Jan 17, 2012](https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=98129&reg=3&lang=2) - Import duty on standard gold bars/coins increased from a _specific duty_ to 2%. 1. Prior to 17th January 2012, customs duty on silver was on specific rate basis (Rs. 1,500 per kg) which was raised to 6% w.e.f. 17th January 2012. 2. [February 27, 2012](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7024&Mode=0) - In 2012, the RBI extended the tenure of gold loan period for exporters from 240 days (60 days for manufacture and exports +180 days for fixing the price and repayment of gold loan) to 270 days ( 90 days for manufacture and export + 180 days for fixing the price and repayment) Foreign Trade Policy (FTP) 2009-14. 3. March 16, 2012 - In the Union Budget 2012-13, the duty was raised to 4%. 4. In 2012-13, India imported an estimated 835 tonnes of gold. This was also one of the major reasons for the record CAD $88.2 billion or 4.8% of GDP. ## 2013 **Measures by RBI and the Government of India to reduce gold imports in India** 1. January 21, 2013 - It was further raises from 4% to 6%. 2. January 22, 2013 - The duty on raw gold is doubled to 5 percent. 3. On February 6, 2013, the RBI [released](https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=28088) the <span style="background-color:#ffffe5;">[[RBI_Report_20130206_Working Group on Issues Related to Gold Imports and Gold Loan NBFCs in India.pdf|Report]] of the Working Group to Study the Issues Related to Gold Imports and Gold Loan NBFCs in India (Chairman: Shri K.U.B. Rao)</span>. 1. At that time, nominated banks and agencies were permitted to import gold under multiple financing arrangements like loan basis, supplier’s credit/buyer’s credit, consignment basis, and unfixed price basis. 1. Loan basis - Gold is imported using borrowed funds, usually from overseas lenders or banks. 2. Supplier’s credit / Buyer’s credit - Exporter allows delayed payment. 3. Buyer’s credit: Importer borrows from a foreign bank to pay the exporter. 4. Consignment basis - Gold is imported without payment, ownership remains with the exporter until sold in India. This was RBI’s main concern. 5. Unfixed price basis - Gold is imported without fixing the price upfront; price is decided later. so the Importer is exposed to price risk, not payment obligation initially. 2. The Working Group noted that a _large portion of gold imports by nominated banks was on a consignment basis_, under which banks did not have to fund the imports themselves. This created an uneven playing field vis-à-vis other imports and weakened the disciplining role of financing costs in moderating gold demand. 3. Accordingly, the Group recommended aligning gold import regulations with those applicable to other imports, so that gold imports would also require *funding and carry normal trade-finance discipline.* 4. [February 14, 2013](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=7865) - The guidelines for for operation of Gold Deposit Scheme 1999 which notified on September 14, 1999 was modified. 1. The central bank allowed the maturity period, of gold deposits, ranging from six months to seven years. Earlier, only the deposits within a maturity range from three to seven years was allowed. 5. [February 20, 2013](https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=92328&reg=3&lang=2) - India's Commerce Ministry recommended suspending cheaper gold jewellery imports from Thailand under the Early Harvest Scheme (EHS) due to suspected misuse of the free trade pact to route gold from other countries, allowing entry at concessional duty rates. 6. February 28, 2013 - No hike in gold import duty was announced in the Union Budget for 2013-14. 7. [May 13, 2013](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7977&Mode=0) - Acting on the group's recommendations, the RBI issued directions to restricting the import of gold on consignment basis by (only banks) but permissible only to meet the genuine needs of exporters of gold jewellery. 8. June [4, 2013](https://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=8020) - To further discourage non-essential imports and thereby tackle the issues of widening current account deficit (CAD), RBI extended the directions of May 13, 2013: [^5] 1. It restricting imports of gold on consignment basis even by nominated agencies/premier/star trading houses who have been permitted by govt. to import gold but permissible only to meet needs of jewelry exporters. 2. It was further decided that all Letters of Credit (LC) to be opened by Nominated Banks / Agencies for import of gold under all categories will be only on 100% cash margin basis. This is because importers were still using LCs with deferred payment (DA), effectively availing short-term credit and boosting gold imports. 3. Further, all imports of gold will necessarily have to be on Documents against Payment (DP) basis. Accordingly, gold imports on Documents against Acceptance (DA) basis will not be permitted. This killed the credit element even if the LCs existed. 1. Documents against Payment (D/P): Shipping documents are released to the importer only after immediate payment, so the exporter is paid before the goods are taken delivery of. 2. Documents against Acceptance (D/A): Shipping documents are released against acceptance of a bill for future payment (by promising to pay later) , giving the importer (credit period) short-term credit. 4. These restrictions would however not apply to import of gold to meet the needs of exporters of gold jewellery. 5. This showed that move was aimed to moderate the demand for gold for domestic use while safeguarding export activity. 9. [June 5, 2013](https://upload.indiacode.nic.in/showfile?actid=AC_CEN_2_45_00006_198215_1517807325366&type=notification&filename=cs31-2013.pdf) – The duty raised by a third from 6% to 8%. 10. [June 6, 2013](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=8022) - RBI restricted the the facility of advances against the security of gold coins per customer to gold coins weighing up to 50 gms. 11. [June 27, 2013](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8072&Mode=0) - RBI issued circular again clarifying that AD Category I Banks are required to ensure that credit in any form or name is not enabled for import of any form of gold, consequent upon the issue of above instructions on June 4, 2013. 12. [July 22, 2013](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8252&Mode=0) - 20% of every lot of import of gold imported to the country to be exclusively made available for the purpose of exports and the balance for domestic use. It would not apply to import of gold by units in the SEZ/EOUs / star trading houses who would import gold only for the purpose of exports. *The scheme was referred to 20/80 Scheme in future circulars. 13. August 13, 2013 - The customs duty (on gold and platinum) was increased for the third time in the year, from 8% to 10% and on silver from 6% to 10%. 14. [August 14, 2013](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=8312) - RBI announced the prohibition of import of gold in the form of coins and medallions, and other restrictions on gold imports. 15. [September 17, 2013](https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=99424&reg=3&lang=2) - To protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths’ or silversmiths’ wares and parts thereof is being increased from 10% to 15%. 16. [November 11, 2013](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8562&Mode=0) - Advance Authorisation (AA) / Duty Free Import Authorization (DFIA) scheme is to be utilised for import of gold meant for export purposes only and no diversion for domestic use shall be permitted 17. [February 14, 2014](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8745&Mode=0) - clarifications were issued for Import of Gold / Gold Dore (unrefined bars) by Nominated Banks /Agencies/Entities - 18. [May 21, 2014](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8893&Mode=0) - The guidelines for [20/80 scheme](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8893&Mode=0#:~:text=Revised%20working%20example%20of%20the%20operations%20of%2020/80%0Ascheme%20for%20import%20of%20gold) for import of Gold by the nominated banks/agencies/entities were revised. 1. The Premier Trading Houses and Star Trading Houses were also [allowed](https://www.pib.gov.in/PressReleasePage.aspx?PRID=1523896&reg=3&lang=2) to import gold under 20:80 scheme. 19. [November 28, 2014](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=9370) - The 20/80 scheme was withdrawn. >[Recommendations of the Working Group to Study Issues relating to Gold Imports and Gold Loan NBFCs in India - RBI's Annual Report in 2013](RBI_Annual%20Report_2013.pdf#page=81&selection=179,0,181,41) ## 2015 1. [February 18, 2015](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9573&Mode=0) - RBI issued guidelines on Import of Gold by Nominated Banks / Agencies after withdrawal of 20/80 scheme. 2. [September 15, 2015](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10084&Mode=0) - A new Gold Monetisation Scheme (GMS) was notified by the DEA, Ministry of Finance, Govt. of India. 1. This [scheme](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10084&Mode=0) modified the Gold Deposit Scheme (GDS), 1999 and Gold Metal Loan (GML) Scheme 2. GMS-linked Gold Metal Loan (GML) Scheme did not replace the [existing Gold (Metal) Loan (GML) scheme](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=9902#2312) operated by nominated banks 3. [FAQs](https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=1690) - Gold Monetization Scheme (GMS), 2015 4. [March 25, 2025](https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2115009&reg=3&lang=2) - Given the performance of the Gold Monetisation Scheme (GMS) and evolving market conditions, it was decided to discontinue the Medium Term and Long Term Government Deposit (MLTGD) components of the GMS w.e.f. March 26, 2025 3. [October 30, 2015](https://rbidocs.rbi.org.in/rdocs/content/pdfs/GB301015F_GC.pdf)- ==Sovereign Gold Bond Scheme== was announced by DEA, Ministry of Finance, Govt. of India to reduce imports of physical gold for investment purposes as gold imports formed a good share of imports and thus was a drag on rupee.  1. Investors could also initiate _early redemption_ of their SGBs after 5 years from the _date_ of issuance. 2. The scheme was [[RBI_Annual Report_2016.pdf#page=103&selection=174,0,174,26|managed]] by the RBI on behalf of the government of India. 4. [November 5, 2015](https://www.pib.gov.in/newsite/printrelease.aspx?relid=130202&reg=3&lang=2) - The PM of India launched the three gold related schemes: 1. Gold Monetisation Scheme (GMS), 2. [Gold Sovereign Bond Scheme](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10095&Mode=0) - The [scheme](https://www.rbi.org.in/Scripts/FAQDisplay.aspx?Id=109) was opened for subscription with first tranche 3. Gold Coin and Bullion Scheme - India’s first ever national gold coin called the Indian Gold Coin(IGC) was launched 5. So 3 gold-related schemes were introduced by Govt. of India in 2015-16 ## 2016 1. [January 14, 2016](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10226&Mode=0) - The government [announced](https://rbidocs.rbi.org.in/rdocs/content/pdfs/01NOTI140115.pdf) the Sovereign Gold Bonds, 2016 will be open for subscription from January 18, 2016 to January 22, 2016. 2. Union Budget 2016 -17 - An excise duty of 1% (without input tax credit including that of input services) and 12.5% [with input tax credit] on articles of gold jewellery (not all gold products or silver items), on jewellers only if turnover is over Rs. 12 crore. 3. The 1% excise duty on branded gold coins with a purity of 99.5% or more was abolished (exempted). >[FAQs](https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=1658) - Sovereign Gold Bond Scheme, October 2015 >[Sovereign Gold Bond Scheme](RBI_Annual%20Report_2016.pdf#page=103&selection=173,0,174,26) in RBI_Annual Report's 2016 ## 2018 1. [February 22, 2018](https://www.niti.gov.in/sites/default/files/2019-06/Report_GoldMarket.pdf) - The [[Niti Aayog_Report_20180222_Committee on Transforming India’s Gold Market.pdf|report]] of the Committee on Transforming India’s Gold Market, constituted by NITI Aayog, was released. It suggested measures to tap the potential of the gold market for providing a stimulus to exports, economic growth and employment. ## 2019 1. [July 6, 2019](https://www.indiabudget.gov.in/budget2019-20/doc/Budget_Speech.pdf) - In the Union Budget for 2019-20, govt. announced an increase in basic customs duty on gold from 10% to 12.5% (+3% SWS cess on BCD+3% I-GST ~ 16.26%). 2. [[DGFT_Notification_20191218_Import of gold in any form has been placed in "restricted" category from the "free" category.pdf|December 2019]] - Import of gold in any form has been placed in "restricted" category from the "free" category. 3. [[RBI_Annual Report_2019.pdf#page=190&selection=91,0,91,49|Box X.4 Gold in Foreign Exchange Reserves – Recent Trends]] in Annual Report of 2018-19 ## 2021 1. [Budget Speech 2021-22.](http://www.indiabudget.gov.in/doc/Budget_Speech) - Basic Customs Duty (BCD) on gold bar was reduced to 7.5% from 12.5% (+ new 2.5% AIDC + SWS = 10% of BCD + 3% I-GST~ 14.07%) ## 2022 1. The total customs duty was further hiked to 15% (BCD of 12.5% and AIDC of 2.5%, plus I-GST of 3% ~ 18.45%) in July 2022. SWS was exempted. 2. [July 29, 2022](https://www.iibx.co.in/static/about.aspx) - As announced in the Union Budget 2020-21, an International Bullion Exchange [(IIBX)](https://www.iibx.co.in/static/about.aspx) at GIFT IFSC (IFSC is a multi-services special economic zone inside the GIFT city, and caters to customers outside the jurisdiction of the domestic economy) was set up under the regulatory ambit of the IFSCA that will enhance India’s position in global bullion markets. 1. The initial work on the conception of IIBX was carried out by the IFSCA, based on inputs from the concerned departments/agencies of the Government of India, the World Gold Council (WGC), the India Gold Policy Centre (IGPC), industry / trade bodies, and GIFT City. 2. [May 23, 2023](https://ifsca.gov.in/CommonDirect/GetFileView?id=d09c93fc98191af1801a5914f3105c02&fileName=constitution-of-precious-metals-advisory-committee24052023055813.pdf) - Precious Metals Advisory Committee (PMAC) was constituted at IFSCA strategic and operational aspects, products, processes, and other relevant issues for the development of the precious metals’ ecosystem at GIFT-IFSC in particular and the entire gold economy of India in general. 3. The [International Financial Services Centres Authority (IFSCA)](https://www.ifsca.gov.in/Pages/Contents/About_Us) is the unified body created specifically to regulate and develop financial services within India's [International Financial Services Centres (IFSCs), like the one in GIFT City, replacing previous fragmented oversight by RBI, SEBI, etc. ## 2023 1. [Union Budget 2023-24](https://www.indiabudget.gov.in/previous_union_budget.php) - On February 1, 2023, the Budget kept the total duty remain unchanged at 15% but basic customs duty was reduced from 12.5% to 10% (+AIDC was increased to 5% from 2.5%). ## 2024 1. [Union Budget 2024-25](https://www.indiabudget.gov.in/previous_union_budget.php) - On 23 July 2024, the Union Budget [increased](GoI_20240723_Increase%20in%20Import%20Duty.pdf) basic customs duty was reduced from 10% to 5% and Agriculture and Infrastructure Cess (AIDC) from 5% to 1%. So the total customs duty on gold and silver was reduced from 15% (10% + 5% AIDC) to 6% (5% +1%), and platinum from 15.4% (10% + 5.4%) to 6.4% (5+ 1.4%). ## 2025 1. There was no change in import duties in the Union Budget of 2025-26. As on Dec-2025, the total customs duty (5% + 1%, 3% IGST on applied to the assessable value + customs duty) $=$ 106 $\times$ 1.03 = 9.18% 2. ## 2026 1. May 12, 2026 - Basic customs duty on gold, silver platinum was increased from 5% to 10%, AIDC for gold and silver was increased from 1% to 5%, and for platinum from 1.4% to 5.4%. So total duty on gold and silver was increased from 6 (5+1)% to 15 (10+5)%, and for platinum from 6.4 (5 $+$ 1.4)% to 15.4(10 $+$ 5.4)%. With IGST of 3%, the effective tax on gold and silver is now around 18.45%, and for platinum around 18.86%. ## Current 1. [[DGFT_Notification_20250519_Amendment in Import Policy_Gold.pdf|Who]] can import gold in India? 1. Nominated banks as notified by RBI - [List of Banks](https://rbi.org.in/scripts/Bs_viewcontent.aspx?Id=1121) authorised to Import Gold/Silver for FY 2025-26 2. Nominated agencies (like MMTC, HHEC, STCl, PEC, MSTC, G&J EPC, Diamond India Limted), 3. Star Trading Houses / Premier Trading Houses (STH/PTH), EOUs/SEZ units in gems and jewellery sector as notified by DGFT, but for the purpose of exports only. 4. Gold Dore can be imported by refineries against an import licence with Actual User (AU) condition. 5. Qualified Jewellers (as notified by IFSCA) through India International Bullion Exchange (IIBX). 6. Valid India-UAE TRQ holders as notified by IFSCA can import gold through IIBX against the TRQ and can obtain physical delivery of the same through IFSCA-registered vaults located in SEZs, as per the guidelines prescribed by the IFSCA. 7. Import of gold under Advance Authorisation scheme (but only for exports) 8. Direct supply of gold by foreign buyer to Indian exporters under 4.45 of FTP for exports. 2. Tenor of gold (metal) loan 1. In case of lending to jewellery exporters, the repayment tenor of GML shall be fixed by a bank subject to the terms and conditions of the extant Foreign Trade Policy (FTP) and the Handbook of Procedures of the FTP. *As on December 2025, it is for up to 1 year, with exports completed within 90 days.* 2. For all GML other than lending to jewellery exporters, a bank may fix a repayment tenor as per its policy, subject to a ceiling of 270 days. ## Monetary Gold 1. [Details](https://sansad.in/getFile/annex/254/AU858.pdf?source=pqars) of data on [[WSS - Weekly Forex Reserves#1.2 Gold|gold reserve]] as per Reserve Bank of India from year 2000-2001 to 2020-21. ## Factors affecting gold demand Various factors influence gold demand 1. US dollar movement 1. Gold prices have been found to be inversely related to the US dollar over a long-term. 2. Lower interest rates/easy liquidity, that is easy availability of money 1. When interest rates are low and bond yields fall, the opportunity cost of holding gold (which earns no interest) falls. 2. Dr. Saumitra Chaudhuri (Financial Express, November 26, 2001) made an analysis of the possible choices for a saver between interest bearing financial instruments and gold. He advocates that in Indian conditions, a return of less than 6 per cent for a saving instrument would induce the saver to invest in gold. [^4] 3. A DRG study [[RBI_Research_DRG_19920421_Gold Mobilisation Instrument as an External Adjustment.pdf|(Gold Mobilisation Instrument as an External Adjustment)]], prepared in the RBI in 1992 found the comparative rate of return available on alternative financial assets like bank deposits, units of UTI, small saving schemes etc. as one of the factors influencing gold demand 3. Political instability like wars 1. During wars, financial crises, or uncertainty, investors shift from risky assets to gold, leading to an increase in gold demand. 4. Fall in value of riskier assets like equities 1. When equities correct sharply, portfolio rebalancing increases demand for gold. It is linked to "flight to safety" concept. 5. Sustained high-Inflation, like due to rising crude oil prices 1. easy liquidity supports gold demand, but sustained demand is typically seen when real interest rates are falling or negative. 6. ==Higher income, unaccounted income, generation of savings and cultural demand== 1. Good monsoon in India can increase agricultural production, leading to higher demand for gold from semi-urban and rural areas for weddings and festivals. In India, gold demand is driven more by marriage customs, household savings behavior (and generation of large rural surplus), and income stability. 2. Rural surplus and unaccounted income in the service sector have far more influence on gold demand than the other factors (Gold Mobilisation Instrument as an External Adjustment, DRG Study, RBI, 1992) in India. 7. Local gold price which depends on USDINR exchange rate, basic customs duty, cess and GST. 8. Central bank gold purchases - central banks like PBoC buying gold increases trust in gold and may influence gold demand by other investors 9. Supply-side factors influencing gold demand (minor but relevant) - Mining output, recycling of gold, and production costs can indirectly influence gold demand over the long run. >[Determinant of Gold Demand In India](RBI_Annual%20Report_2012.pdf#page=86&selection=10,0,11,35) in RBI's Annual Report 2012 >[Gold as a Financial Asset in Different Phases of Financial Cycles](RBI_Annual%20Report_2022.pdf#page=223&selection=6,0,6,65) in RBI's Annual Report 2022 ## Rules/Regulations/Directions/FAQs 1. FEM (Current Account Transactions) [Rules](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=10193#sdi:~:text=laws%2C%20as%20applicable.-,Annex%20%2D1,-Foreign%20Exchange%20Management), 2000 - Import of gold by nominated banks 1. [Master Direction – Import of Goods and Services](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10201) 2. Directions - [Reserve Bank of India (Gold Monetization Scheme) Directions, 2015](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10084). 3. Gold Metal Loan (GML) Scheme: 1. [Reserve Bank of India (Gold Metal Loans) Directions, 2025-Draft](https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=4720) 2. [Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=13156) 1. It has replaced the RBI Master Circular on Loans and Advances - Statutory and Other Restrictions dated July 1, 2015 4. ==[FAQs](https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=1690) - Gold Monetization Scheme, September 2015== 5. [FAQs](https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=1658) - Sovereign Gold Bond Scheme, October 2015 ## References 1. Atul Sharma, A. Vasudevan, K. Kanagasabapathy, Mythili Narayan, Mohua Roy. (1992, April 21). *Gold Mobilisation Instrument as an External Adjustment*. DRG study. [[RBI_Research_DRG_19920421_Gold Mobilisation Instrument as an External Adjustment.pdf|pdf]] 2. RBI. (1995, August 24). *Report of the Standing Committee on Gold and Other Precious Metals.* [[RBI_Report_199508_The Standing Committee on Gold and Other Precious Metals .pdf|pdf]] | [Link](https://rbi.org.in/scripts/PublicationReportDetails.aspx?ID=985) 3. Y.V. Reddy. (1996, Nov 28) *Gold in the Indian Economic System - Dr.Y.V. Reddy* \[Speech\]. Gold Economic Conference organised by the World Gold Council at New Delhi. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=28) 4. Usha Thorat. (1997, August 2). *Development of Gold Market in India - by Smt. Usha Thorat* \[Speech\]. New Delhi. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=230) 5. Y.V. Reddy. (1997, August 2). *Gold Banking in India by Dr. Y.V. Reddy* \[Speech\]. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=237) | [[RBI_Speech_19970802_Gold Banking in India_Y.V.Reddy.pdf|pdf]] 6. Y.V.Reddy. (2002, March 21). *Evolving Role of Gold – Recent Trends and Future Direction - Dr.Y.V.Reddy* \[Speech\]. Conference organized by World Gold Council at New Delhi. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=103) 7. RBI. _Report of the Committee on Fuller Capital Account Convertibility._ [[RBI_Report_1997_Committee on Capital Account Convertibility (1997)_Chairman-S.S.Tarapore_Tarapore Committee-1.pdf|Tarapore Committee 1-1997]] | [Tarapore Committee 2-2006](RBI_Group-Committee_2006_Committee%20on%20Fuller%20Capital%20Account%20Convertibility_2006_Chairman-S.S.Tarapore_Tarapore%20Committee-2.pdf) 8. A Karunagaran (RBI). (2011, October 11). *Recent Global Crisis and the Demand for Gold by Central Banks: An Analytical Perspective*. RBI WPS (DEPR): 14/2011. [[RBI_Research_WPS_20111011_Recent Global Crisis and the Demand for Gold by Central Banks- An Analytical Perspective*. RBI WPS (DEPR)_A Karunagaran. .pdf|pdf]] 9. RBI. RBI WPS (DEPR) : 02/2012: Gold Prices and Financial Stability in India. Authors-Rabi N. Mishra and G. Jagan Mohan. [Link](https://rbi.org.in/scripts/PublicationsView.aspx?id=14015) | [pdf](RBI_Research_WP_20120228_RBI%20WPS%20(DEPR)%20-%2002:2012-%20Gold%20Prices%20and%20Financial%20Stability%20in%20India.pdf) 10. RBI. (2013, February 06). *Report of the Working Group to Study the Issues Related to Gold Imports and Gold Loans NBFCs in India*. [Link](https://rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=699). 11. ==RBI. *Gold Monetization Scheme, 2015.* [Link](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10084&Mode=0)== 12. RBI. (2016). Annual Report. [pdf](RBI_Annual%20Report_2016.pdf) 13. RBI. (2019). *Gold in Foreign Exchange Reserves (of central banks) – Recent Trends* in the [[RBI_Annual Report_2019.pdf#page=190&selection=91,0,91,49|Annual Report of 2018-19]]. ### Others 1. Swarnkar, S. (2009). The Gold Control Act of 1965, its socio-economic implications. _Proceedings of the [Indian History Congress](https://indianhistorycongress.com/about/)_, _70_, 1181–1191. [Link](http://www.jstor.org/stable/44147762) 2. Niti Aayog. (2018, February 22). *Report of the Committee on Transforming India’s Gold Market*. [[Niti Aayog_Report_20180222_Committee on Transforming India’s Gold Market.pdf|pdf]] [^2]: Y.V. Reddy. (2002, May 10). *India’s Foreign Exchange Reserves : Policy, Status and Issues*. National Council of Applied Economic Research, New Delhi. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=109) | [[RBI_Speech_20020510_India’s Foreign Exchange Reserves - Policy, Status and Issues by Y.V. Reddy_.V. Reddy.pdf|pdf]] [^3]: Swarnkar, S. (2009). The Gold Control Act of 1965, its socio-economic implications. _Proceedings of the [Indian History Congress](https://indianhistorycongress.com/about/)_, _70_, 1181–1191. [Link](http://www.jstor.org/stable/44147762) [^4]: Y.V.Reddy. (2002, March 21). *Evolving Role of Gold – Recent Trends and Future Direction - Dr.Y.V.Reddy* \[Speech\]. Conference organized by World Gold Council at New Delhi. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=103) [^5]: Mr. N.A. Mazumdar, in many of his articles, has been holding the view that a capital starved country like India cannot afford to utilize foreign exchange on a commodity like gold. He holds the opinion that the consequences of the gold liberalization policy could be alarming, especially in view of the fact that such imports of gold are unrelated to India’s exports of jewellery. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=103)