Explained | Why PM Modi asked Indians to put off buying gold for a year?

India is one of the world’s largest importers of gold, and over 90 per cent of its annual requirement is met through imports. Higher demand increases dollar outflow and widens the country’s import bill.

Emphasising that the Centre is trying to shield people from the adverse impact of the ongoing West Asia conflict, Prime Minister Narendra Modi has called for judicious use of fuel, postponement of gold purchases and foreign travel, among other measures, to strengthen the economy.

Addressing a rally in Hyderabad on Sunday, he suggested reducing petrol and diesel consumption, using metro rail services in cities, carpooling, increased use of electric vehicles, utilising railway services for parcel movement, and working from home to conserve foreign exchange amid the crisis in West Asia.

Stressing the need to save foreign exchange in view of the crisis, Modi called for postponing the purchase of gold and foreign travel for one year.

"Gold purchases are another area where foreign exchange is used extensively... In the national interest, we must resolve not to purchase gold for a year, no matter how many functions we have scheduled at home," he said.

Gold and crude oil account for the majority of India's import costs, leading to a massive outflow of foreign currency.

India is one of the world’s largest importers of gold, and over 90 per cent of its annual requirement is met through imports. While its annual demand ranges between 700 and 800 tonnes, domestic production is negligible at only 1–2 tonnes a year. Gold purchases in the country rise significantly during festivals and wedding season.

Since gold is largely imported, higher demand increases dollar outflow and widens the country’s import bill. India's gold imports surged to $72 billion in financial year 2025-26, marking a 24% jump compared with $58 billion in the financial year 2024-25.

According to the Commerce Ministry data, the country's gold imports rose 28.73% to $69 billion during April-February 2025-26 on account of high prices of the precious metal. The rise in gold imports pushed the country's trade deficit (difference between imports and exports) to $310.6 billion during the 11-months of the last fiscal as compared with $261.8 billion during April-February 2024-25, the data showed.

India's forex reserves dropped by $7.794 billion to $690.693 billion during the week ended May 1, the Reserve Bank of India said last week. In the previous reporting week ended April 24, the overall reserves declined by $4.82 billion to $698.487 billion.

Rupee value weakens; crude oil price up

The rupee has also weakened sharply against the US dollar in recent weeks. On May 11, the rupee crashed 139 paise to 94.9 against the US dollar in early trade after US President Donald Trump rejected Iran's response to the US' peace proposal. Following this, crude oil prices surged rapidly to above $105 a barrel, intensifying concerns over inflation and energy security worldwide.

India’s fuel import burden has surged sharply since the West Asia conflict escalated earlier this year. Officials have warned that continued disruption in the Strait of Hormuz could keep oil prices high for months.

As of early 2026, India imports roughly 88–89% of its crude oil requirements, up from 87.8% in FY24, highlighting high dependency on foreign energy sources.

Union Petroleum and Natural Gas Minister Hardeep Singh Puri said on May 1, 2026, that India had maintained stable energy supplies and shielded consumers from global price shocks despite a prolonged disruption caused by the closure of the Strait of Hormuz amid the West Asia crisis.

During his speech on Sunday, Modi said that when there is pressure on the supply chain, difficulties increase despite various government measures to address the situation. "That's why, during a global crisis, keeping the country above all else, we have to take resolutions," he said.

"We got into work from home, virtual meetings, video conferencing, and many other methods during Covid-19. We got used to them. The need of the hour is to resume those methods," Modi said.