Prime Minister Narendra Modi appealed to Indians to avoid buying gold for one year to reduce the nation's reliance on imports [2].
The request targets one of the world's largest gold markets and could significantly impact the domestic jewellery industry by suppressing consumer demand. This move comes as India faces economic pressures, including rising crude-oil prices and a widening trade deficit [1, 3].
Modi's appeal reached an estimated 1.4 billion people [2]. Government officials and analysts said the initiative aims to curb rising gold imports while tempering physical jewellery demand, especially as investment-grade gold becomes more popular than traditional jewellery [2, 3].
Industry leaders have expressed concern over the potential for a market slowdown. Kirit Bhansali, chief of the Gem & Jewellery Export Promotion Council, said the industry is already seeing a shift in consumer behavior. He said, "Exchange of old gold for new jewellery is now 70% of the market" [4].
The reliance on old-gold exchanges indicates that consumers are already hesitant to buy new gold at current prices [4]. A government-led appeal to further postpone purchases may exacerbate this trend, potentially leading to reduced revenues for retailers and artisans across the country [3].
While the government views the measure as a necessary step to stabilize the economy, the jewellery sector said such a directive could stifle growth in a luxury market that is central to Indian cultural traditions [3].
“Exchange of old gold for new jewellery is now 70% of the market.”
This appeal reflects a strategic attempt by the Indian government to manage its current account deficit by reducing the outflow of foreign exchange used for gold imports. By encouraging a shift away from physical jewellery, the state is attempting to align national consumption with broader macroeconomic goals, even at the risk of disrupting the domestic retail jewellery ecosystem.
