₹6.77 lakh crore import hit: Why PM Modi wants Indians to delay buying gold

Prime Minister Narendra Modi on Sunday urged Indians to postpone gold purchases and foreign travel for a year, cut fuel consumption and adopt Swadeshi products as the Centre attempts to shield the economy from the fallout of the ongoing West Asia conflict.

Addressing a BJP rally in Telangana, Modi said India needed to conserve foreign exchange as global crude oil and fertiliser prices surged because of the crisis. "We have to save foreign exchange by any means," he said.

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Calling for a return to habits adopted during Covid-19, the Prime Minister suggested work-from-home, virtual meetings and video conferencing to reduce fuel use and imports. "The need of the hour is to resume those methods," he said. He also urged citizens to reduce petrol and diesel consumption, use metro rail services, adopt carpooling, increase the use of electric vehicles and shift parcel movement to railways.

Modi further called for reducing edible oil consumption, lowering the use of chemical fertilisers and promoting natural farming and Swadeshi products.

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Why did Modi specifically mention gold purchases?

The Prime Minister's remarks come at a time when India's gold import bill has surged to record levels. India is the world's second-largest bullion market after China. Gold also constitutes the largest share of India's import bill after oil.  

According to Commerce Ministry data, India's gold imports rose 24 per cent to an all-time high of $71.98 billion (₹6.77 lakh crore) in 2025-26, compared with $58 billion (₹5.45 lakh crore) in 2024-25. Imports stood at $45.54 billion (₹4.28 lakh crore) in 2023-24 and $35 billion (₹3.29 lakh crore) in 2022-23.

Even though the value of imports rose sharply, the quantity of gold imported actually fell 4.76 per cent to 721.03 tonnes in 2025-26 from 757.09 tonnes a year earlier, indicating the impact of soaring global gold prices.

India imports nearly 85 per cent of its gold requirement, making the country heavily dependent on overseas purchases and foreign currency outflows.

The India Bullion and Jewellers Association, in a report prepared with BDO India in 2024, warned that rising gold imports could worsen pressure on India’s current account deficit and increase vulnerability to global volatility.

The report also noted that Indian households hold nearly 35,000 tonnes of gold, much of it lying idle outside the formal economy. According to the industry body, every tonne of gold recycled domestically could potentially save nearly $95 million (₹893 crore) in imports.

Why is foreign exchange under pressure?

India's forex reserve has fallen to the lowest level in over a month as of May 1. The foreign-exchange reserves stood at $690.7 billion as of May 1, covering about 10 to 11 months of imports. 

The reserves had hit an all-time high of $728.494 billion during the week ended February 27 this year, before the beginning of the West Asia war. 

The Iran conflict led to several weeks of decline, as the rupee came under pressure and the RBI had to intervene in the forex market by selling dollars.

Oil Pressure

The Iran conflict has driven up global oil prices, increasing pressure on India's economy because the country imports nearly 85 per cent of its crude oil needs. While the crude import bill has shot up, the oil marketing companies have not passed the burden on consumers. This has resulted in huge losses for the companies. 

Three state-run fuel retailers - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - are estimated to be losing around Rs 1,600 crore to Rs 1,700 crore every day on petrol, diesel and LPG sales. The combined losses of the three companies have crossed Rs 1 lakh crore over the last 10 weeks.

The Centre has already attempted to cushion consumers by sharply cutting fuel excise duties. Excise duty on petrol was reduced from Rs 13 per litre to Rs 3, while the levy on diesel was cut from Rs 10 to zero. The excise reductions alone are estimated to have reduced government revenues by nearly Rs 14,000 crore every month.

India spent $174.9 billion (₹16.44 lakh crore) on crude and petroleum products, or 22% of its total imports in the financial year ended March 2026.

(Conversions calculated at $1 = ₹94)