India’s Prime Minister Narendra Modi made a striking appeal on Sunday, urging Indians to refrain from buying gold jewelry for at least one year to safeguard the nation’s foreign exchange reserves. This call comes as India, the world’s second largest gold importer, grapples with a mounting import bill of $72 billion for the precious metal in the financial year ended March 2026.
The request is part of a broader push to curb economic strain, with Modi also asking citizens to cut back on fuel consumption and avoid non-essential overseas travel. India’s reliance on imports for nearly 85% of its fuel needs, coupled with 50% of crude oil, 60% of liquefied natural gas, and almost all liquefied petroleum gas passing through the volatile Strait of Hormuz, has left the economy vulnerable. Escalating conflict in the Middle East and soaring oil prices have further pressured the rupee, now hovering near an all-time low against the dollar.
“For a year, be it any function, we shouldn’t buy gold jewelry,” Modi emphasized, highlighting the urgency of preserving national resources.
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The government has ruled out raising duties on gold and silver imports for now, though administrative hurdles at Indian banks did provide some relief to the trade balance in April.
Beyond gold and travel, India’s energy imports paint a dire picture, with $174.9 billion spent on crude and petroleum products in the last financial year, accounting for 22% of total imports. To mitigate the burden, the government has held retail fuel prices steady by slashing taxes, easing pressure on oil companies.
Economic forecasts are darkening, with UBS Securities downgrading India’s growth projection for the financial year ending March 2027 to 6.2% from 6.7%, citing energy shocks from Middle East unrest. Chief Economic Advisor V. Anantha Nageswaran had already flagged in March that the trade deficit could widen sharply in the coming year.
“Keeping it manageable will require burden-sharing between the government, via fiscal absorption, and households and businesses,” Nageswaran noted.
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