India’s hidden gold chest is giving imported bullion a run for its money

Indians are finding ways to keep their age-old appetite for gold alive this festive season. With prices of their favourite metal swinging wilder than a Netflix thriller, some buyers are choosing to wait and watch, while others are digging into the yellow metal lying in bank lockers and tucked away in jewellery boxes.

While the festive season typically sees Indians increase their gold purchases, the growing use of old gold exchanges could be good news for policymakers looking to curb imports of the yellow metal.

India, the world's second-largest consumer of gold after China, imports roughly 700–900 tonnes of the yellow metal every year.


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With geopolitical tensions driving up commodity prices and putting pressure on the rupee, a hefty gold import bill is an added burden for India. Higher imports can widen the country's trade deficit and put further pressure on its external finances.

Household gold reserves could offer a silver lining to this story. Indian households collectively hold one of the world’s largest reserves of private wealth in gold, varying between 25,000 tonnes to 50,000 tonnes as per various estimates.

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This vast stock of household gold is now offering a way to meet demand without relying entirely on fresh imports. Gold imports fell sharply to $2.3 billion in August, down 45% from the previous month and 58% from a year earlier. Gross import volumes were estimated at just 15–20 tonnes, while gold's share in India's total merchandise imports slipped to 3%, from 9% a year ago, according to the World Gold Council (WGC).

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The WGC said the decline suggested that existing domestic gold supplies were sufficient to meet expected demand.

Affordability squeeze

Soaring gold prices may be one of the key factors prompting consumers to bring out their existing gold holdings.

According to Sehul Bhatt, Director, Crisil, “Rather than curtailing purchases, consumers are increasingly using existing gold holdings to offset the cost of new jewellery.”

Domestic gold prices stood at Rs 151,346 per 10 grams on an average in September 2026, up 3.6% from January 2026 and within about 2% of the record high reached in May 2026.

In contrast, based on monthly averages up to September 2026, international gold prices stood at $4,324.7 per ounce, down 8.8% from January 2026 and 13.8% from the peak of $5,019.5 per ounce reached in February 2026.

Explaining this divergence, Bhatt told ET Online that domestic factors have limited the pass-through of lower international prices. The increase in import duty to 15% from 6% in May 2026 “raised the landed cost of gold by about 8.5%, while rupee depreciation of around 8% added further pressure.”

Landed cost refers to the total cost of imported gold once it reaches India, including import duties and other charges, before it is sold in the domestic market.

Old gold, new jewellery

In the first quarter of FY27, old and recycled gold contributed over 40% of the jewellery revenue of key organised retailers, according to Crisil.

Old-gold exchange has become an increasingly important contributor to our jewellery sales, Dr. Joy Alukkas, Chairman & Managing Director, Joyalukkas Group told ET Online. In August 2026, approximately 73% of the brand’s sales came through old-gold exchange, compared with 57% in the same period last year, marking an increase of 16 percentage points.

“This reflects the growing relevance of the exchange model in the jewellery market, enabling customers to exchange jewellery they already own for new designs while making effective use of their existing gold assets.”

The increase in old-gold exchange has been particularly noticeable since May 2026, Alukkas said. “This shift has been supported by a stronger focus on promoting the exchange of old jewellery and creating greater awareness among customers about its benefits.”

In an interview with ET Online, Titan CEO Arun Narayan said the company has witnessed a positive month-on-month increase in purchases through gold exchange schemes and over 50% of its transactions in its stores “now feature an element of exchange.” This includes both gold bought elsewhere and existing Tanishq pieces brought in for upgrades, he stated.

“Historically, Indian consumers preferred to accumulate gold rather than trade it in. Over the last year—especially following the appeal—consumers have become far more open to exchanging idle gold, broken jewellery, or coins sitting in lockers. It recycles and recirculates existing domestic gold reserves, which is a very positive development.”

At Kalyan Jewellers, recycled gold accounted for over 46% of the company’s revenue in Q1 FY27, rising to over 55% in June. The company’s objective is to sustain this at 55–60% going forward, said Ramesh Kalyanaraman, Executive Director, Kalyan Jewellers in an email response to ET Online, adding that gold recirculation has increased “significantly”.

Senco is seeing a similar trend. Old-gold exchange crossed 50% of its business in the second quarter.

The trend also gained momentum following Prime Minister Narendra Modi’s recent appeals to curb gold purchases.

“Based on the appeal of the Honourable Prime Minister, we continued special campaigns and schemes to promote old gold exchange to preserve our precious foreign exchange as well as to ensure sales momentum,” said Suvankar Sen, Managing Director and CEO of Senco Gold & Diamonds.

Sen, however, cautioned that higher exchange volumes could put some pressure on margins.

Beyond the price effect

Following the Prime Minister’s appeal on May 10, there has been a greater focus on encouraging the exchange of existing gold, said Alukkas, ruling out zoomed in prices as the sole reason behind this obvious shift.

In a speech in Secunderabad, Telangana, on May 10 this year, PM Modi urged Indians to avoid buying gold for the next one year.

Higher prices are certainly influencing the decision, said Mangesh Chauhan, MD, Sky Gold & Diamonds, but the change is more “nuanced” than gold becoming unaffordable.

“Customers may still have the same occasion to celebrate and the same budget to spend, but they are rethinking the weight, purity or design of the jewellery they buy. Exchanging old jewellery helps bridge the gap between what they can spend and what they want to buy.”

Reduced dependence on imported bullion

While customers get to bring home new designs without stretching their budgets, jewellers benefit from reduced reliance on imported gold.

“The strong inflow of recycled bullion has significantly affected our fresh procurement and sourcing strategies,” Alukkas said. He added that gold received through customer exchanges helps the company meet a substantial portion of its requirements, allowing it to optimise fresh purchases based on demand and recycled availability.

However, when part of a transaction value is settled with old gold, the cash realisation per sale declines even if the total billed value remains unchanged, said Crisil’s Bhatt. “As a result, reported revenue growth may understate the strength of the underlying jewellery demand.”

At the same time, fresh bullion remains important for maintaining consistent production and meeting demand across jewellery categories, Chauhan stressed. “Overall, we see the growing role of recycled gold as a positive development. It supports greater supply-chain flexibility while fresh bullion continues to remain an important part of our manufacturing requirement.”