Prime Minister Narendra Modi has urged citizens to delay buying gold to help lower India’s import bill amid the West Asia crisis. While major leading jeweller bodies and jewellery brands have welcomed the intention behind the statement, they are worried about its impact on their businesses as well as jobs of people working in the industry. So, as a retail investor, how might the PM’s statement impact your gold investments and what action should you take regarding them? Should you buy, sell or hold?
What did PM Modi say about gold purchases?
Given the tensions in West Asia, Modi has urged for some austerity measures. He stressed that the Centre is trying to shield people from the adverse impact of the conflict in West Asia, calling for careful fuel usage, delaying gold purchases and limiting foreign travel, among other steps to strengthen the economy.
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What should you do with your gold investments after PM Modi’s advice on postponing gold purchases?
Prithviraj Kothari, managing director at RiddiSiddhi Bullions Ltd., president, IBJA, says Modi’s statement is a patriotic voluntary appeal and not a policy ban or the price cap.
Kothari advises to current gold investors that selling the yellow metal now would be a mistake.
“The RBI itself has been steadily accumulating gold, growing India's sovereign gold holdings from 794.64 metric tonnes in September 2025 to 880.52 metric tonnes by March 2026. The government is buying what it asked citizens to pause — validating gold's long-term value,” says Kothari.
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For new gold investors, Kothari recommends shifting toward digital financial alternatives, which allow investors to benefit from gold prices without increasing physical imports or dollar outflows.
Dr C Vinod Hayagriv, managing director, C Krishniah Chetty Group, advises people to continue buying gold jewellery, but he advises against purchasing raw gold, saying such large imports of gold creates pressure on foreign exchange reserves without contributing meaningfully to economic growth.
Suvankar Sen, MD and CEO Senco Gold and Diamonds, says short-term market movements or policy discussions should not trigger panic decisions and consumers should take a balanced view based on their liquidity needs and financial goals.
“For most households, holding gold as part of a diversified portfolio continues to make sense, especially in uncertain global conditions, so consumers should hold gold unless it is for personal financial needs or needs of the nation,” says Sen.
How gold imports increase India’s import bill
Hayagriv says India imports nearly 800 tons of gold annually, and industry estimates suggest that close to 200 tons is locked away every year in the form of raw bullion purchased by individuals as passive investments.
Hayagriv says such large imports of gold creates pressure on foreign exchange reserves without contributing meaningfully to economic growth.
Giving an estimate for FY26, Kothari said that in FY26, India imported a record nearly $72 billion worth of gold.
What are the solutions the jewellery industry is suggesting?
Jewellers’ bodies such as IBJA, All India Jewellers & Goldsmith Federation (AIJGF) and established jewellery players, Malabar Gold & Diamonds and C Krishniah Chetty Group, have come up with their solutions, which they claim can solve India’s import bill problem.
AIJGF national president, Pankaj Arora, in a letter to Commerce Minister Piyush Goyal, has called for an overhaul of the country's gold mobilisation framework instead of deferring purchases of the precious metal as suggested by the PM.
In a letter dated May 11, 2026, Arora said that domestic gold mobilisation and recycling could be a better solution to foreign exchange problems rather than deferring purchases, which could threaten the livelihoods of 35 million people.
"While the intention of protecting India's foreign exchange reserves is understandable, the solution should not be to demand destruction. The solution should be domestic gold mobilisation, recycling and productive circulation of India's idle gold stocks," Arora writes in the letter.
The jewellers and goldsmith body warned that a sudden negative shift in consumer sentiment could reduce footfalls, slow manufacturing orders, and hit the incomes of small jewellers and artisans - the most vulnerable workers in the supply chain.
"This is not merely a gold trade issue. This is a livelihood issue," the letter says.
In a social media post on X, IBJA said that amending the Income Tax Act to allow borrowing and lending of commodities (Gold) can be a solution to the account deficit problem.
“India’s current Account deficit (#CAD) is linked to the Income Tax Act. Amend the Income Tax Act to allow borrowing and lending of commodities (gold). Currently a holder of household gold can’t lend gold to jewellers of his choice as the Income Tax Act does not permit this. India needs a regulated exchange platform for lending and borrowing of gold similar to equity lending and borrowing which is already permitted,” said IBJA in its post on X.
Malabar Gold & Diamonds in a statement said that greater focus on recycling, exchange, reuse, and monetisation of existing domestic gold can play an important role in reducing import dependency, limiting dollar outflow, and strengthening the Indian economy over the long term.
Hayagriv, meanwhile, says a simple structural reform permitting the sale of raw bullion only to GST-registered buyers can immediately reduce unnecessary imports, improve transparency and strengthen the organised jewellery ecosystem.
“India must encourage value-added consumption of gold rather than idle locker-based investments that do not support the broader economy,” says Hayagriv.
Kothari, however, says that the impact of Modi's statement will be psychological, not structural, and most Indians will keep buying gold.
"India's 10-12 million annual weddings embed gold demand that is pre-committed and culturally non-negotiable — Akshaya Tritiya, Dhanteras, and wedding-season buying will not simply stop on a PM's appeal. The PM's words, however, may nudge discretionary buyers toward lighter jewellery, digital gold, and ETFs — formats that don't trigger import demand,” says Kothari.
