Prime Minister Narendra Modi urged Indian citizens to stop buying gold to protect the nation's rupee and foreign-exchange reserves.
The move signals a critical effort to stabilize the economy as India faces soaring energy costs and dwindling financial buffers. The measures aim to curb the outflow of currency amid a volatile global market.
In a televised address on May 10, 2026, Modi announced a seven-point austerity plan to address the economic strain [1]. A central component of this plan is a three-fold increase in import duties on gold and silver [1], [2].
Modi said the measures are necessary because foreign reserves have fallen by $47 billion [1], [3]. This decline occurred over the three months following the start of the U.S.-Israel war on Iran [1], [4].
"I urge all citizens to refrain from buying gold for the next year to protect our rupee and foreign-exchange reserves," Modi said [1].
The austerity call comes as India struggles with a high energy-import bill and rising fuel prices [4]. The Prime Minister said that crude oil prices reached $105 per barrel, triggering the need for drastic action [4]. This volatility has led to fuel prices being hiked four times in a single fortnight [1].
Beyond gold restrictions, the austerity plan includes requests for citizens to reduce fuel use and adopt work-from-home practices to lower energy demand [4]. Modi said the three-fold rise in import duties on precious metals reflects the seriousness of the situation [2].
Market reports from May 30, 2026, indicate that the gold trade has already been hit by these appeals [5]. The government's strategy seeks to prioritize essential imports over luxury goods to prevent further currency devaluation.
“"I urge all citizens to refrain from buying gold for the next year to protect our rupee and foreign-exchange reserves."”
India's decision to discourage gold consumption is a strategic move to stem the drain of U.S. dollars from its reserves. By combining high tariffs with a public appeal to patriotism and austerity, the government is attempting to manage a balance-of-payments crisis exacerbated by geopolitical instability in the Middle East and the resulting spike in energy costs.
