Modi's Gold Appeal Sends India's Imports Plummeting

Prime Minister Narendra Modi's renewed appeal to Indians to curb gold purchases has led to a decline in India's gold imports. The government is trying to contain the country's gold import bill and bring more of the yellow metal held by households into circulation.

Data accessed by ET Online shows that India's gold imports fell nearly 4% year-on-year in May to 29.4 tonnes from 30.6 tonnes in the same month a year earlier. The decline then became sharper, with imports dropping 20% in June, 23.7% in July, and nearly 30% in August.

The government raised the customs duty on gold and silver to 15% from 6% in May, making imported gold more expensive. Gold prices have also remained elevated, which can influence both consumer demand and import volumes.

India is one of the world's biggest consumers of gold, importing most of what it uses. A sustained reduction in gold imports could help ease pressure on the trade balance and the current account. The government wants households to put some of the estimated 31,000 tonnes of gold held by Indians to productive use rather than keeping it idle.

The bullion industry expects the latest appeal to contribute to a roughly 15% decline in gold imports in September, which could offer an early indication of whether Modi's renewed call to limit gold purchases is translating into a measurable change in consumer behaviour.