Titan CFO Ashok Sonthalia warned that jewellery demand in India could face a temporary slowdown if the government implements measures to curb gold buying.
This potential shift in consumer behavior comes as the Indian government seeks to protect its foreign-exchange reserves from the volatility of gold imports. Because gold is a central pillar of Indian cultural and economic life, government intervention could disrupt one of the world's largest jewellery markets.
Prime Minister Narendra Modi addressed the issue during an appearance on Bloomberg Television on April 19. "I urge all Indians to avoid buying gold for at least a year to protect our foreign-exchange reserves," Modi said [1].
Sonthalia noted that such restrictions would likely impact retail sales. "We could see a temporary slowdown in demand if the government implements any measures to curb gold buying," Sonthalia said [1].
Market data suggests that high prices are already impacting consumers. During the Akshaya Tritiya gold-buying festival, held April 19-20 [2], demand remained muted [3]. The gold price reached U.S.$1,670 per 10 grams [4] — a figure 63% higher than the price during the previous Akshaya Tritiya festival [4].
Reporting from the Reuters team indicated that record-high prices curbed jewellery purchases during the holiday period [3]. This suggests that the market is already reacting to pricing pressures even before any formal government restrictions are enacted.
While the government's goal is to stabilize the economy, the jewellery sector faces a dual challenge. Retailers must navigate both the psychological impact of the Prime Minister's appeal, and the economic reality of record-breaking gold costs [1], [3].
“"I urge all Indians to avoid buying gold for at least a year to protect our foreign-exchange reserves."”
The intersection of record-high global gold prices and a government-led campaign to preserve foreign-exchange reserves creates a significant headwind for India's luxury retail sector. By urging a year-long pause in purchases, the Indian government is attempting to reduce the capital outflow associated with gold imports, which may lead to a structural shift in how Indian consumers approach gold as an investment versus a cultural asset.
