“For a year, be it any function, we shouldn’t buy gold jewellery.”
With that line at his party’s event in Hyderabad on May 10, Prime Minister Narendra Modi did something unusual even by Indian political standards: he asked households to change a habit that sits at the heart of weddings, savings and social status.
The appeal landed at a sensitive moment as global oil prices had surged on the back of the US-Iran conflict, the rupee had weakened sharply, and India’s foreign exchange cushion is under pressure.
The Reserve Bank of India said reserves stood at $691.1 billion (approx. AED 2.5 trillion) at end-March, enough for about 11 months of imports.
Oil, war and the rupee: how they all connect
The logic behind Modi’s message is straightforward.
India is one of the world’s biggest oil importers, and the crude imports fall and the rupee weakens when the Middle East supply is disrupted.
In late April, Brent crude briefly touched $126.41 a barrel, and by May 11, it was still trading above $105 after the latest flare-up in US-Iran tensions.
As oil rises, Indian refiners and importers need more dollars.
That pushes up demand for foreign currency, which puts pressure on the rupee and, in turn, makes every barrel of imported oil more expensive.
It is a classic feedback loop as more imports mean more dollars, a weaker currency, and even higher import costs.
India’s $72 billion gold habit
Gold is the other big leak in the external account.
India imported $72 billion (approx. AED 264.5 billion) worth of gold in 2025-26, up 24% from the previous year, with a surge in ETF demand also helping drive flows.
That matters because gold is largely discretionary, as a family can delay a necklace purchase in a way it cannot delay crude oil.
On simple arithmetic, a 30% to 40% drop in a $72 billion (approx. AED 264.5 billion) import bill would save roughly $22 billion (approx. AED 80.8 billion) to $29 billion (approx. AED 106.5 billion) in foreign exchange, while a 50% cut would save about $36 billion (approx. AED 132.2 billion).
That is why gold has moved to the center of the government’s message, especially ahead of the wedding season, when demand usually peaks.
Can a voluntary appeal actually work?
PM Modi has not announced a ban, a tax hike, or an import curb.
This is a public appeal, not an enforceable policy, and gold remains deeply embedded in Indian culture as a wedding essential, a store of value and an auspicious gift.
Still, the market took notice as jewellery stocks slumped on Monday, with jewellers such as Titan, Kalyan Jewellers and Senco Gold falling sharply as investors priced in the risk of softer demand.
At the same time, the industry already has a practical workaround: gold exchange-traded funds.
India’s investment demand for gold surpassed jewellery demand for the first time in the March quarter, with investors increasingly choosing bars, coins and ETFs instead of physical jewellery.
For investors watching India’s macro story, the bigger takeaway is not that households will stop buying gold forever.
It is that New Delhi is signaling how serious it is about defending the rupee and preserving reserves while global energy shocks filter through to inflation, trade and growth.
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