India Increases Gold and Silver Import Tariffs to Curb Forex Pressure India has raised import tariffs on gold and silver to address growing concerns over forex reserves and inflation, aiming to reduce reliance on foreign currency for these commodities. The move, announced after Prime Minister Narendra Modi’s appeal to citizens to curb non-essential gold purchases and avoid unnecessary foreign travel, comes amid a sharp rise in gold imports and a weakening rupee. Context and Rationale The government increased the import duty on gold from 6% to 15%, with an additional 3% GST, raising the effective rate to 18.45%. For silver, the tariff was raised to 12.5% from 7.5%. Officials cited the need to stabilize the rupee and reduce the current account deficit, as gold imports accounted for 72 billion dollars in fiscal year 2025-26. The decision follows a surge in gold demand, driven by cultural significance in India, where gold is integral to weddings, festivals, and savings. Economic Implications The tariffs are expected to increase domestic prices for gold and silver, though experts debate their effectiveness. Chirag Seth of Metals Focus noted that higher tariffs could deter imports, but Rajesh Rokade of the All India Gems and Jewellery Council argued that the government’s appeal to curb gold purchases has not significantly reduced demand. The move also aims to alleviate pressure on India’s forex reserves, which fell to 690.7 billion dollars by mid-May, the lowest level in over a month. However, analysts warn that high oil prices, a strong dollar, and capital outflows continue to strain the rupee. V Chung of BNW Asia-Pacific Macro Strategy highlighted that while the tariffs may offer limited relief, they cannot fully counteract these broader economic challenges.#india #prime_minister_narendra_modis #rupee #gold_imports #current_account_deficit
What Will Happen If Indians Stop Buying Gold for One Year? AI's Shocking Reply Goes Viral A viral question on social media platforms like X asked, "What would happen if Indians stopped buying gold for one year?" The query sparked widespread debate, with AI-generated responses offering insights into the potential economic and social impacts. The discussion gained traction amid Prime Minister Narendra Modi’s recent appeal for reduced gold purchases, highlighting the growing interest in analyzing the role of gold in India’s economy. According to AI data, India’s gold imports surged to nearly $72 billion in the fiscal year 2025-26, driven by high global gold prices and strong domestic demand during festivals and weddings. If gold purchases were halted for a full year, the AI analysis suggested significant changes: India could save $72 billion in foreign exchange, reduce its trade deficit, and strengthen the rupee. The current account deficit (CAD), which stands at 1.3% of GDP, could see improvement, easing pressure on the Indian rupee and allowing reserves to be used for capital goods, oil, and technology imports. However, the AI response also highlighted potential risks. The jewelry sector, which employs millions, could face severe losses, threatening livelihoods. Additionally, short-term disruptions might hit domestic industries, and there’s a risk of consumers shifting savings from gold to other imported goods or assets. The debate also touched on the cultural and emotional significance of gold in Indian society. Gold is deeply tied to weddings, festivals, and social status, serving as a "safety net" during crises, especially in rural areas.#india #prime_minister_narendra_modi #sovereign_gold_bonds #gold_imports #gold_jewelry_sector
Prime Minister Narendra Modi's Call to Avoid Gold Purchases Sparks Debate on Gold Imports and Sector Impact Prime Minister Narendra Modi has urged citizens to refrain from buying gold for a year, citing concerns over gold imports and the need to preserve foreign exchange reserves amid geopolitical tensions. His appeal, made within 24 hours, has led to significant challenges for the jewelry sector, with companies like Titan experiencing sharp declines in share prices. The directive, aimed at curbing gold imports and stabilizing the economy, has sparked discussions among industry leaders and policymakers. The call to avoid gold purchases follows a period of rising inflation and a surge in domestic gold demand, which has placed pressure on India’s foreign exchange reserves. Modi’s appeal was framed as a measure to address the economic strain caused by the Middle East crisis and the need to safeguard foreign currency. However, the impact has been immediate and severe, with jewelry companies reporting declining sales and share prices plummeting. Ashok Sonthalia, Chief Financial Officer of Titan, a flagship company of the Tata Group, has offered a potential solution to the government’s concerns. In an interview with Business Today, Sonthalia highlighted the vast amount of gold stored in temples, bank lockers, and private collections across India. He suggested that rotating this existing gold supply could reduce the need for new imports, thereby alleviating pressure on foreign exchange reserves. Sonthalia emphasized that the government’s focus on curbing gold imports is both short-term and long-term. He pointed to Titan’s own strategies, such as its exchange program for gold, as a model for managing surplus gold.#prime_minister_narendra_modi #titan #tata_group #gold_imports #ashok_sonthalia
PM Modi Urges Indians to Cut Gold Purchases to Save Foreign Exchange Reserves India’s Prime Minister Narendra Modi has called on citizens to reduce unnecessary gold purchases and overseas travel to conserve the country’s foreign exchange reserves. The government has raised the import duty on gold and silver from 6% to 15% to discourage imports, which have surged to record levels. Gold imports reached $71.98 billion in 2025-26, a 24% increase from $58 billion in the previous fiscal year. This spike is attributed to sharply rising global gold prices, which jumped from approximately $76,617 per kg in FY25 to nearly $99,825 per kg in FY26. Modi emphasized that small changes in consumer behavior, such as delaying gold purchases for a year, could lead to significant savings in foreign exchange. The government’s policy aims to redirect resources toward more productive investments, as gold imports contribute to the current account deficit and strain foreign exchange reserves. When India imports gold, it uses dollars, increasing the demand for foreign currency and reducing reserves. This dynamic exacerbates the trade deficit and pressures the rupee’s value against the dollar. India remains the world’s second-largest gold consumer after China, with domestic demand in 2025 reaching 800 tonnes. Approximately 85-90% of this demand is met through imports, as domestic production accounts for only about 1% and recycling contributes 10-11%. The surge in imports has pushed gold’s share of total imports to over 9%, with the sector accounting for $72 billion in 2025-26. This has widened the trade deficit to $333.2 billion in 2025-26 and increased the current account deficit to $13.2 billion, or 1.3% of GDP, in the December quarter. Experts highlight the dual role of gold in India’s economy.#india #prime_minister_narendra_modi #reserve_bank_of_india #gold_imports #current_account_deficit
