Uday Kotak says India can become current account surplus nation: Asia's richest banker shares one golden formula

India’s growing appetite for gold is emerging as a bigger concern for the country’s external finances, particularly as higher oil prices and a weakening rupee add to pressure on the import bill.

Veteran banker and Kotak Mahindra Bank founder Uday Kotak on Friday said India needs to address its heavy dependence on gold imports, estimating that the country’s gross gold import bill could reach $88-90 billion in FY27.

Kotak also proposed setting up a committee to examine how India can manage the demand for gold while addressing its broader capital and current account challenges.


He was speaking at the Conference on Financing India's Journey Towards Viksit Bharat, attended by Finance Minister Nirmala Sitharaman as well as finance ministers from states and Union Territories.

Gold weighs on current account

Kotak pointed to the scale of gold imports in relation to India’s current account deficit, arguing that the country’s external position would look considerably stronger if gold were excluded from the calculation.

"For FY26, the current account deficit of India was $25 billion. So we had our current account deficit very controlled. Gold imports gross in one year is $72 billion. Therefore, if you exclude gold, India had a current account surplus," Kotak said.

For the current financial year, Kotak estimated that India’s current account deficit could widen to around $60 billion if crude oil prices average about $90 a barrel. Against this backdrop, he expects gross gold imports to rise to $88-90 billion.

"Indians and their gold - that is a puzzle we have to find a way to solve," he said.

Kotak said a committee could be considered to explore measures that recognise the importance of gold to households while also addressing the implications of gold imports for India’s capital account and current account.

He noted that gold held by Indian households represents significant individual wealth, but much of that wealth is not being channelled into productive economic activity.

Call for tighter fiscal policy

Kotak also called for greater fiscal consolidation, saying India’s combined fiscal deficit at the Centre and state level remained above 7%.

"At 7 plus percent consolidated fiscal deficits, we need to get tighter," he said, while acknowledging the fiscal constraints faced by both the central government and state governments.

On the broader financing of economic growth, Kotak said India has moved significantly beyond the traditional model in which savings were primarily channelled towards borrowers.

The country, he said, has increasingly shifted towards an investor-to-issuer framework, with capital markets playing a larger role in connecting investors with businesses seeking funds.

However, he cautioned against allowing financial markets to become overly focused on trading activity rather than their underlying economic purpose.

"At times when the objective of capital formation gets lost and we focus on just markets, volumes and trading, we at times run the risk of missing the key reason why we have financial markets," he said.

Global uncertainty an opportunity

Kotak said the uncertainty facing the global economy should not only be viewed as a challenge for India, but also as an opportunity to accelerate reforms and investment.

"There is a global crisis and the principle of a global crisis is never waste a crisis. We must make full use of the crisis and implement measures at speed and alacrity," he said.

He called for India to strengthen its ability to produce goods and services that are in demand globally, while reducing dependence on other countries for critical products and services.

"Our dependence on goods and services from others exposes us. The more we can produce and create goods and services which the world wants from us will make us competitive," Kotak said.

According to Kotak, improving domestic production and expanding India’s global competitiveness would help reduce vulnerabilities arising from excessive dependence on imports.

Balance regulation with growth

On the financial sector, Kotak argued that regulation needs to strike a balance between protecting financial stability and allowing the sector to develop.

He said regulators should ensure that the financial system remains stable without imposing restrictions that unnecessarily constrain its growth.

Kotak also said accountability for wrongdoing should rest with those responsible for misconduct, rather than institutions that may themselves have been victims.

As geopolitical tensions, global trade disruptions and financial uncertainty continue to pose challenges, Kotak urged India to avoid complacency and strengthen coordination between the Centre and states.

"The more we get together and make ourselves as a single nation, the more we will be able to withstand the challenges which face the world at large," he said.