The call by Prime Minister Narendra Modi to Indians to refrain from purchasing gold for a year has resulted in a lot of debate in the financial market, jeweller shops and households. The demand coincides with India increasingly coming under pressure on foreign exchange reserves on account of the high import bill for gold and other energy products in the wake of economic uncertainty in the world.
The Global Trade Research Initiative (GTRI) lent its voice to the call after Prime Minister’s remarks, saying that India’s growing reliance on foreign gold is further exacerbating the country’s trade deficit and rupee’s woes.
Government is concerned about the growing imports of Gold
The fact is that India is almost completely reliant on the import of gold for use in the country and that bullion purchases have a significant impact on the import bill.
Importation of gold made into bars has increased significantly in recent years, according to GTRI records.
In India, the amount of gold imports has been on the rise since the year 2000.
| Year | Gold Imports (USD Billion) | UAE Share |
|---|---|---|
| 2022 | $36.5 Billion | 7.9% |
| 2023 | $42.6 Billion | 15.7% |
| 2025 | $58.9 Billion | 28.0% |
According to the report, the surge in imports is having a major impact on India’s foreign exchange reserves at a time when the world is facing considerable geopolitical volatility and crude oil prices are all over the place.
PM Modi’s Call To Action Reaches Economic Security
Prime Minister Modi advised buying of gold “in national interest” and also recommended to postpone any non-essential gold buying, particularly for wedding ceremonies.
The government officials are of the opinion that curbing gold imports would also help in preserving foreign exchange reserves, stabilising the trade balance and enhancing the economic vulnerability of India in the event of the turbulent global conditions.
The appeal is even greater in light of the ongoing Middle East crisis and the chaos surrounding the Strait of Hormuz, which has already put pressure on world oil and shipping markets.
The government also wants to reduce the amount of fuel that is being consumed
In New Delhi, Union Minister Ashwini Vaishnaw echoed the Prime Minister’s message at the CII Annual Business Summit 2026.
He added that each and every citizen is responsible to safeguard the Indian economy by curbing unnecessary foreign exchange expenditure. He also pointed to fuel use as a big issue, in addition to gold imports.
The minister appealed to the people and industries to:
- Wherever possible, cut down on the use of petrol or diesel
- Don’t spend unnecessarily that requires imports
- Increase exports and foreign exchange earnings
- Ensure economic stability at home in an uncertain world.
Officials said that the current economic policy of India is geared towards the preservation of foreign reserves and to face external pressures.
Gold Trade between India and UAE under scrutiny
The GTRI also recommended that the government check the tariff rates concession provided in India-UAE Free Trade Agreement (FTA).
The think tank cited lower import taxes on precious metals at Dubai as one of the key factors in the growth of gold imports.
Now, analysts feel that the policy makers may review to check if the existing trade architecture is at least indirectly promoting the in-flow of too much bullion into India.
Modi’s comments lead to jewellery stocks falling
The Prime Minister’s message also saw heavy selling of jewellery company stocks with the investors worried of a slowdown in consumer demand if they stop buying gold.
Jewellery Stocks Performance
| Company | Decline |
|---|---|
| Senco Gold | -8.69% |
| Titan | -6.45% |
| Kalyan Jewellers | -8.3% |
| PC Jeweller | -3.26% |
Market experts state that investors are concerned about the low demand by consumers which may impact sales of jewellery; with gold generally seeing a surge in demand during wedding and festive seasons.
The Significance Of Gold In India
The cultural aspects, weddings, festivals and the investment demand keeps India as one of the big consumers of gold in the world. Gold is considered as a safe investment in times of uncertainty particularly in the rural and middle classes.
Also Read: Gold, Silver Rate Today: Latest 24K, 22K Prices In Major Cities
But, economists say that undue imports of gold result in the leakage of precious foreign exchange as the country has limited gold production.
With the ongoing surge in imports along with a gradual pick-up in crude oil prices, the current account deficit might further expand, putting pressure on inflation and the rupee, experts say.
The government thus appears to be sending out a message that economic prudence and foreign exchange savings are now national issues in a time of increasing international turbulence.
