Jewellery Associations to Discuss PM Modi's Gold Buying Advisory
Meeting with PMO Officials
Jewellery industry representatives are scheduled to meet with officials from the Prime Minister’s Office (PMO) on Tuesday, May 12, as reported by a leading news channel. This meeting follows Prime Minister Narendra Modi's recent call for citizens to temporarily refrain from purchasing gold and to reduce non-essential expenditures over the coming year. During a public event in Hyderabad, PM Modi urged the public to adopt a more prudent approach to spending in light of economic uncertainties. He encouraged individuals to minimize unnecessary consumption, postpone discretionary purchases like gold and international travel, conserve energy, and support locally manufactured goods.
The Prime Minister's statements have sparked discussions within the jewellery sector, which is now poised to explore the wider implications of his appeal with government officials. Modi's comments come at a critical time as India faces increasing pressure on its foreign exchange reserves. Rising global commodity prices and ongoing uncertainties in international supply chains have heightened concerns regarding external vulnerabilities.
Recent data indicates that India's foreign exchange reserves fell by $7.794 billion to $690.693 billion for the week ending May 1. The country remains heavily reliant on imports for essential commodities such as crude oil, edible oils, fertilizers, and gold. This reliance exposes the economy to fluctuations in global prices and geopolitical tensions that can affect the rupee and exacerbate trade imbalances.
Gold, in particular, is a significant factor in India's import expenditures. The nation consumes approximately 700 to 800 tonnes of gold annually, while domestic production is limited to just 1 to 2 tonnes. Consequently, over 90% of India's gold demand is satisfied through imports.
Concerns Over Record Gold Imports
Despite its cultural significance and investment potential, gold imports lead to substantial foreign currency outflows without significantly boosting industrial output or exports. In FY26, India's gold imports reached a record high of $72 billion, reflecting a 24% increase from the $58 billion recorded in FY25. The precious metal now constitutes nearly 9% of the country's total imports, ranking among the largest import categories after crude oil. Currently, gold imports incur an effective duty of around 6%, which includes customs and related charges.