India requires a comprehensive gold policy to clearly delineate whether gold is a commodity or currency, as well as to clarify consumer perceptions, according to a report from the State Bank of India (SBI).
The report highlights differing views on gold across regions, noting that in Western countries, gold is regarded as public property, while in Eastern nations—particularly India, Japan, Korea, and China—it continues to be perceived as private property.
The SBI report emphasizes, “The time has now come to conceive a comprehensive policy on gold, and it is crucial to define what gold is (commodity or money) and how it is perceived by its ultimate consumer.”
Presently, India’s gold policy largely concentrates on reducing demand and recycling existing gold stocks for productive use. The report points out that as gold serves as a source of funds without directly contributing to capital formation, monetizing gold could positively influence future investments.
Comparative assessments in the report delineate India’s gold position against that of China. China’s central bank maintains approximately 2,300 tonnes of gold, in contrast with India’s 880 tonnes. Moreover, China has an articulated central bank policy regarding gold, whereas India’s stance remains unspecified. The average household gold holding in China is less than 10 grams, with a target of 20 grams, while Indian households possess over 25 grams of gold. China’s defined household policy correlates to current account trends, while India’s approach appears need-based.
The report underscores that China possesses an undisclosed but defined gold policy, and involvement from commercial banks in various gold operational levels is common. In contrast, Indian banks are primarily limited to financing the gems and jewelry sectors, exporters, and facilitating gold deposits.
In terms of gold production, China leads globally with rapidly evolving assaying facilities. India’s domestic output is smaller; however, reports from the Geological Survey of India (GSI) suggest substantial gold deposits in Madhya Pradesh, Odisha, and Andhra Pradesh. While China holds a strong international footprint as a member of the London Bullion Market Association (LBMA), India, despite being a significant global jewelry exporter, is not a member.
The report attributes India’s historical gold policies post-independence to six primary elements: encouraging investment in other asset classes, regulating gold supply, curbing smuggling, minimizing household demand for physical gold, maintaining low domestic gold prices, and ensuring exchange rate stability and financial balance.
However, the report critiques these measures as largely short-term, primarily focused on curtailing physical gold demand. Only three documents, including the Reserve Bank of India’s internal report from 1992 and two Tarapore Committee reports, attempted a long-term perspective.
Furthermore, the report argues that the geopolitical importance of gold, increasingly central to global economic dialogues, received inadequate attention in previous analyses. It also notes that past interventions failed to consider the perspectives of the gold industry, which provides substantial employment directly and indirectly. Thus, the report advocates for India to adopt a comprehensive and long-term approach to gold policy that acknowledges its economic, cultural, and strategic significance.
Published on November 5, 2025.
