India's $336 billion gold import spree strains its economy amid widening deficits
India holds a staggering amount of gold—between 35,000 and 40,000 metric tonnes, or nearly 20% of all gold ever mined. Yet, despite this vast reserve, the country has imported 2,273 metric tonnes over the last three fiscal years, costing around $336 billion at current prices. The reliance on imports comes at a time when India’s current account deficit is widening, with oil and gas alone costing $230 billion in FY27. India’s gold imports over the past three years account for roughly a quarter of global gold production. These imports, valued at $336 billion, add pressure to an already strained current account deficit. The situation has worsened due to prolonged disruptions in the Hormuz Strait, now closed for over 10 weeks, which may extend well into 2027.
The government has attempted to reduce reliance on physical gold through schemes like the Gold Monetisation Scheme (GMS) and Sovereign Gold Bonds (SGB). Launched in 2015, the GMS mobilised just 37.81 metric tonnes of gold for productive use. Meanwhile, the SGB scheme attracted ₹72,000 crore in investments, equivalent to 147 metric tonnes of gold. Despite these efforts, the total value of gold held by Indians remains around $5 trillion. Analysts suggest a more flexible and well-structured GMS could unlock this idle capital, cutting imports and freeing up funds for economic development.
With gold imports costing billions and supply disruptions likely to persist, India faces growing economic strain. The existing schemes have had limited success in tapping into the country’s vast gold reserves. A more effective approach could help ease the current account deficit while putting idle assets to productive use.
