Modi Urges Indians to Halt Gold Buying Amid Trade Deficit Crisis

Prime Minister Narendra Modi has urged Indians to pause gold buying as India struggles to contain its widening trade deficit and rupee depreciation. The country's trade deficit has ballooned to over $330 billion for the fiscal year ending March 2026, a 17.9% increase from the previous year. Gold imports have contributed significantly to this strain, accounting for around 11% of total imports.

The government raised customs duties on gold from 6 to 15% in May, but this has not deterred Indian households from buying gold. In fact, gold imports doubled in July to an estimated 40-45 tonnes, and jewellery sales rose by about one-third year-on-year to $21 billion in Q2.

Gold demand remains broad-based, with around two-thirds originating outside urban centres. The World Gold Council notes that more than 75% of families in the bottom income decile hold some gold.