I didn’t think that was still done, and I’m sad to hear it is even being considered. Don’t do it. I was held back in 2nd grade for the very same reason, and all it did was make things worse socially because I was stigmatized as the dumb kid who couldn’t even pass 2nd grade by my peers. Kids notice these things, and they aren’t kind about it. When he says he’ll miss his friends, he’s saying he wants to stay in that group, that there’s a comfort level there that he knows he’ll lose. Whether he’s conscious of it or not, he knows how he’ll be treated as “held back” kid. I spent the rest of my school years feeling shame and missing the group of kids I was separated from, even though none of them were “friends” by standard definition. They were still my “people.”
Social interactions can’t be forced. And they also don’t always look the same for everyone. Some of us are introverted and simply don’t need as much social interaction as others. But we think of others a lot, and have other ways of expressing friendship.
The best you can do is teach him social protocols. Let him find friends on his own terms, or he’ll never really appreciate such relationships.