While a part of BRICS, India is not seeking to dethrone the US dollar, regardless of any claims to the contrary. However, behind its cautious reserve management language, New Delhi is quietly reorganising its assets. The Reserve Bank of India(RBI), is reducing its US dollar exposure, repatriating gold from overseas vaults, and strengthening domestic control of its bullion reserves.

The shift is gradual and understated, marking an evolution rather than a revolution in how India manages its place within the global monetary system. Over the past few years, RBI has diversified its foreign exchange reserves while steadily increasing the share of gold. Data from the RBI itself show that since 2018, India’s gold holdings have grown both in value and as a proportion of total reserves, even as overall reserves have remained comfortably above $650bn for most of 2024 and 2025.

A growing portion of that gold is now physically stored within India’s vaults, reflecting a broader effort to enhance sovereign control. Indian policymakers have been clear that the strategy is not part of a campaign to move away from the US dollar. The greenback still accounts for about 60% of global central bank holdings, and for India, whose trade, borrowing and energy payments remain largely US dollar denominated, maintaining significant US dollar assets is unavoidable. However, the composition of those assets is shifting.

Since 2021, the RBI has trimmed its holdings of long-term US Treasury securities, a move that reflects both tactical responses to higher yields and growing awareness of geopolitical risks. Officials describe this as prudential diversification. India, like several emerging economies, has drawn lessons from recent episodes in which countries in strife with the West on non-economic issues have faced fiscal restrictions, tariffs or even outright sanctions on overseas reserves.

Not to mention, instances where it has to make and settle payments in currencies like the the yuan which belongs to its biggest adversary country - China. Furthermore, another lever of dependence happens to be its status as one of the largest debtors of the World Bank.

Without endorsing financial decoupling, the RBI is seeking greater control over the assets that underpin its external stability. Gold has re-emerged as a stabilising counterweight. In the past five years, the RBI has added more than 100 tonnes of gold, taking total holdings close to 825 tonnes by early 2025. The share of gold in total reserves has risen from about 6% in 2018 to nearly 8% in 2025.

The focus is not only on the scale of accumulation but also its geography. Until recently, about two-thirds of India’s gold was stored abroad, mainly in the Bank of England’s vaults. In 2024, the RBI confirmed it had moved more than 100 tonnes of gold from the UK to its own vaults in Nagpur, Maharashtra, marking the first large-scale repatriation in over two decades. Officials described the decision as logistical and strategic, aligning with expanded domestic storage capacity and prudent reserve management.

The message was clear, India wants a larger share of its bullion under its own control. The move reflects both financial prudence and geopolitical caution. With sanctions increasingly used as instruments of policy, India’s leadership recognises the risk of overreliance on assets held in Western jurisdictions. By keeping more gold at home, the RBI shields a portion of its reserves from potential restrictions in times of crisis and signals growing institutional capacity to safeguard its wealth.

The approach aligns India with a broader trend among emerging economies such as Turkey and China, which have also repatriated gold to mitigate geopolitical risks. Analysts view this as a continuation of India’s cautious financial philosophy. The country remembers the 1991 balance-of-payments crisis, when it was forced to pledge gold to raise foreign exchange.

Three decades later, India is again turning to gold, this time as a symbol of confidence rather than desperation. Gold, however, has its limits. It is less liquid than US dollar assets and cannot be easily used to manage exchange rate volatility or sudden import demands. The RBI’s decision to hold more gold domestically must therefore be balanced with sufficient liquid reserves abroad.

Officials stress that repatriation has not involved selling foreign securities. The majority of assets remain parked with custodians in the US, UK and other financial centres. Gold held at home is part of a diversified portfolio that serves as strategic insurance rather than an operational tool. India’s dual-track strategy combines liquid US dollar assets overseas with physical gold reserves at home.

The approach maintains credibility with investors while slightly reducing vulnerability to sanctions or financial disruptions. The pattern is consistent with other developing nations that have diversified into gold and non US dollar currencies over the past decade. According to the World Gold Council, global central bank gold purchases hit record highs in 2022 and 2023 as countries sought protection from US dollar volatility and geopolitical risk. India’s approach remains measured. Unlike Russia or China, it is not trying to build alternatives to the US dollar or create currency blocs.

Rupee settlement arrangements with partners such as the UAE and Sri Lanka remain limited in scale and pragmatic in purpose. For policymakers in New Delhi, the goal is straightforward, to reduce concentration risk, strengthen reserve resilience and assert physical ownership without politicising the process. The policy aligns with India’s broader stance of strategic multi-alignment, balancing ties with competing global powers while maintaining autonomy. Repatriating gold carries symbolic weight at home.

As India aims to become the world’s third-largest economy by the end of the decade, holding and securing its own bullion reflects economic confidence and institutional maturity. The RBI’s Nagpur vaults, among the most secure in Asia, underscore India’s growing technical capacity to manage assets once entrusted to foreign custodians. The central bank is expected to maintain a conservative but adaptive strategy, continuing gradual gold accumulation and diversifying its foreign exchange portfolio toward more euro and yen holdings. Yet none of these steps imply a rejection of the US dollar’s role.

India is not seeking de-dollarisation but quiet financial sovereignty. By trimming its external vulnerabilities and keeping more of its wealth within reach, New Delhi is fortifying its monetary defences. The US dollar will remain central to India’s external balance sheet, but increasingly so will gold secured within its own borders.