Boycott gold buying: Modi’s call and its impact
LET’S abide by Prime Minister Narendra Modi’s call to boycott gold purchases and foreign travel, among other measures, to strengthen the economy from the adverse impacts of the West Asia crisis.
The concern is centred on India’s economy — specifically, the trade deficit and pressure on the rupee.
Gold imports cost India billions of dollars annually because the country buys most of its gold from abroad.
If people buy too much gold, more foreign currency leaves India; the trade deficit can widen; the rupee may weaken and less money may flow into productive investments like businesses, manufacturing, or infrastructure.
At a rally in Hyderabad on Sunday, Modi said: “It is time for us to use petrol, diesel and gas with great care. We must make efforts to use only as much as is needed to save foreign currency and reduce the adverse effects of war crises.”
His comments come as crude oil and gold account for the bulk of India's import costs and are draining India's foreign-exchange reserve.
RBI data shows that foreign exchange reserves fell by $7.794 billion to $690.693 billion in the week ended 1 May, from a record high of $728.494 billion in the week ended 27 February, before geopolitical tensions in the Middle East triggered sustained pressure on the rupee and prompted RBI intervention through dollar sales.
To understand the implications of Modi's comments, one must understand how gold buying impacts the Indian economy.
It is no secret that Indians have a long affinity for gold. They are also one of the world's largest consumers, typically importing 700-800 tonnes annually to meet over 90% of its domestic demand. These massive gold imports form a major part of the nation’s import bill, especially now that rising prices are also increasing import costs.
In 2025-26, gold imports jumped 24% to an all-time high of $71.98 billion. Gold imports stood at $58 billion in 2024-25. It was $45.54 billion in 2023-24 and $35 billion in 2022-23.
The rise in imports of these precious metals has pushed the country's trade deficit to $333.2 billion during 2025-26.
If people suddenly stop buying gold altogether, there could also be negative effects: jewellery businesses may slow down; goldsmiths and workers could lose income; retail demand during weddings and festivals may weaken; states dependent on jewellery trade could feel an impact.
In reality, one public appeal alone usually does not drastically change Indian gold consumption. Gold is deeply connected to Indian culture, weddings, savings habits, and family security.
Most economists believe any effect would likely be moderate unless accompanied by policy changes such as higher import duties or restrictions.
The broader idea behind such appeals is often to encourage people to move savings into: banks, mutual funds, stocks,
infrastructure bonds, or sovereign gold bonds, instead of physical gold.
So the impact depends on how strongly consumers respond and whether alternative investment options appear attractive and trustworthy.
Modi’s call was not a ban on gold purchases. It was an appeal asking citizens to voluntarily reduce gold buying temporarily.
