The India Bullion and Jewellers Association has proposed a new structure for the Gold Monetisation Scheme, offering jewellers up to a 1% incentive on old gold collection. The move aims to boost household gold recycling and reduce import reliance. Investors should note this is currently a proposal under government review, with no official notification yet.
The India Bullion and Jewellers Association (IBJA) has submitted a proposal to the government and the Reserve Bank of India to overhaul the existing Gold Monetisation Scheme. The core of the plan is to offer jewellers an incentive of up to 1% on the value of old gold collected from customers. The association suggests that by enabling jewellers to act as collection points, the scheme can overcome previous logistical challenges that limited its success since it began in 2015.
How the Proposed Scheme Would Work
Under the current proposal, the operational burden would shift from banks to retail jewellers. Jewellers would collect gold from customers and facilitate the transfer to refiners, receiving a commission for their services. Banks would continue to manage the deposit and credit aspects of the process but would be removed from the front-end collection, which the IBJA believes is the most effective way to engage with gold owners. By bringing the scheme into retail outlets, the industry hopes to leverage the existing trust and customer relationships that jewellers have built over decades.
For organised jewellery retailers, such as Senco Gold and other major chains, this could theoretically serve as a new service offering. While the primary goal is to mobilize idle household gold and reduce the nation’s reliance on costly gold imports, such a system could also drive increased customer footfalls to retail showrooms. If implemented, this would allow jewellers to capture a segment of the recycling market that is currently dominated by unorganised players.
Challenges and Implementation Risks
Although the proposal seeks to streamline gold recycling, several factors remain outside the control of the industry. The most significant hurdle is the persistent public hesitation regarding the tax implications of depositing gold. Many households are concerned that declaring or depositing old gold could trigger inquiries about the source of wealth or attract tax scrutiny. Additionally, the sentimental value attached to inherited jewellery often makes consumers reluctant to have it melted, regardless of the financial incentive offered.
Investors should also note that this remains a policy proposal. As of August 2026, there has been no official government notification or timeline for implementation. IBJA leadership has indicated that the current political and economic environment could cause delays, with the proposal likely requiring thorough review by the government and regulatory bodies before any rollout. Therefore, while the idea aims to solve a long-standing issue of domestic gold mobilisation, its actual impact on the financial performance of jewellery companies depends entirely on whether it receives regulatory approval and how effectively the government addresses public concerns about taxation and transparency.