As geopolitical tensions in West Asia continue to impact the global supply chain, Prime Minister Narendra Modi has asked citizens to adopt measures to save the country’s foreign exchange (forex) reserves.
Apart from urging people to avoid unnecessary foreign travel, save petrol & diesel and adopt organic farming, PM Modi also asked citizens to avoid buying gold for a year. Here’s how much forex reserves India spends to import gold:
PM Modi’s appeal comes at a time when India is facing rising external pressures on its forex reserves due to elevated global commodity prices and growing uncertainty in international supply chains. India’s forex reserves dropped by $7.794 billion to $690.693 billion during the week ended May 1.
Why Gold Imports Matter For India
India is one of the world’s largest consumers of gold. The country consumes around 700-800 tonnes of gold every year but produces barely 1-2 tonnes domestically. This means India depends on imports for more than 90 per cent of its gold requirement.
Also, gold imports do not significantly contribute to industrial production or exports at a large scale. However, they require massive outflows of foreign currency.
India’s gold imports surge to a record $72 billion in the financial year 2025-26, a 24 per cent jump compared with $58 billion in FY25.
Gold accounts for nearly 9 per cent of India’s total import bill, making it one of the country’s largest import categories after crude oil. Currently, India imposes an effective import tax of around 6 per cent, including customs duty and other levies.
The timing of the Prime Minister’s appeal is important because geopolitical tensions in West Asia have already pushed up energy prices globally, thus putting pressure on the country’s forex reserves. Against this backdrop, policymakers appear keen to curb non-essential imports that add pressure on dollar outflows.
Gold is often viewed as a household investment and store of wealth in India, particularly during weddings and festivals. However, from a macroeconomic perspective, heavy gold imports increase foreign exchange outflows without proportionate economic productivity gains.
By asking people to delay discretionary gold purchases for a year, the government is trying to reduce pressure on the import bill during a period of elevated global uncertainty.
India’s Gold Imports Have Already Fallen
The prime minister’s remarks have come at a time when India’s gold imports are already witnessing a sharp decline. Gold imports fell from nearly 100 tonnes in January 2026 to around 65-66 tonnes in February. Imports then plunged further to about 20-22 tonnes in March.
April imports are estimated at just 15 tonnes, among the lowest monthly levels recorded in nearly three decades outside the Covid period.
The sharp fall has been attributed not only to high gold prices but also to disruptions in the import pipeline.
