Modi's Gold Warning: Imports Soar Amid Trade Deficit Worries

Prime Minister Narendra Modi's latest appeal to Indians has sent shockwaves through the gold market, with jewellery stock prices plummeting. The PM's message, delivered on September 1, urged citizens to avoid buying gold as imports continue to rise.

India is one of the world's largest consumers of gold, but domestic production lags far behind demand. As a result, most gold used for jewellery and investment must be imported. In FY26, India's gold imports reached a record $71.98 billion, up 24% from the previous year.

The PM's appeal is part of a broader effort to moderate gold imports and conserve foreign exchange reserves. Gold imports add directly to the country's trade deficit, increasing its dependence on foreign capital and other forex inflows.

Jewellery retailers have been rolling out initiatives to encourage recirculation of 'idle gold' stashed in Indian households, as the government hikes import duties to curb imports. Shares of major jewellery companies like Titan Company and Kalyan Jewellers fell sharply after the PM's appeal, with some stocks declining up to 10%.