Why PM Modi asked Indians not to buy gold?

Once called “Sone ki Chidiya”, has its wings torn apart in 2026?

On 10 May 2026, Prime Minister Narendra Modi urged Indian citizens to stop buying gold for one year to protect the national economy and its forex reserves. 

This appeal was followed on 13 May 2026 by a significant government hike in the effective gold import duty from 6% to 15%. These drastic measures were taken to curb a record $72 billion import bill and protect the rupee against surging global crude oil prices.

While jewellery stocks did drop to 11% in a single day, I feel this is not a crisis but a moment of strategic clarity for the market. 

At Flora Fountain, we believe that understanding the friction between economic necessity and Indian cultural DNA is the only way for brands to navigate the next 12 months. 

So what’s going to happen? What should happen? What can happen? It all depends on the psyche of the Indian Consumer and not the Government

Let me explain.

Table of Contents

1. The Logic Behind PM Modi’s “Don’t buy Gold” appeal
2. Why Indian’s Won’t Stop Buying Gold?
3. What happened when past Prime Ministers did the same thing?
4. Who Should Actually Pay Attention to the Prime Minister’s Appeal?
5. What Jewellery Businesses in India Should Focus On?
6. Conclusion
7. FAQs

The Logic Behind PM Modi’s “Don’t buy Gold” appeal

On 10 May 2026, speaking at a public gathering in Hyderabad, Prime Minister Narendra Modi made seven appeals to Indian citizens to help protect the economy. Among them: do not buy gold for one year. The nation was shocked. The sheer suddenness of the move was what caused this reaction.

Here’s what led to this statement. 

India imports almost all the gold it consumes. 721 tonnes in 2025-26, worth $72 billion. That is paid for in US dollars. At the same time, crude oil has surged from $70 to nearly $126 per barrel due to the conflict in West Asia and disruptions in the Strait of Hormuz. India imports 85% of its crude oil. The rupee is already under pressure, trading close to record lows at around 94.9 against the dollar.

When you are spending these many dollars on two of the world’s most expensive commodities simultaneously, oil and gold, a Prime Minister asking citizens to exercise restraint is not an overreaction. 

But here is the thing. From my experience leading a prominent jewellery marketing agency in Ahmedabad, I have found that 

intent and outcome are two very different things when dealing with gold in India.

Why Indian’s Won’t Stop Buying Gold?

Gold in India is not a “behind closed doors” purchase. 

It is not something families add to the cart when they’re doomscrolling on Amazon.

In India, it is written into rituals. 

Firstly, gold is a woman’s financial security.

In millions of Indian households, particularly in rural India, the gold gifted at a woman’s wedding is legally and culturally her own property. It is not sentiment. It is a safety net.

You cannot appeal your way out of that.

Secondly, Gold is part of generational wealth.

Think about it. 

Families do not buy gold to sell it for a quick profit; they buy it to pass it down in their lineage. 

“Pushtaini gehne” is a term you’ve 100% heard in your household.

You cannot convince a culture to trade a multi-generation legacy for a volatile stock market index. That is just not how the Indian mindset works

This is why I feel that the impact of Modi’s speech will be psychological and short-term. It will not be structural. 

History tells us this, clearly and repeatedly.

What happened when past Prime Ministers did the same thing?

Shockingly, this is not the first time an Indian government has asked its people to stop buying gold.

1962/1968 Gold Control Act: 

• Prime Minister Jawaharlal Nehru and Finance Minister Morarji Desai introduced strict restrictions on private gold. 
• The law banned the possession of primary gold bars/coins and limited jewellery purity to 14 carats. It completely failed because Indian demand remained firm, driving the entire trade underground. 
• A massive smuggling economy, hawala networks, and criminal syndicates boomed until the act was repealed in 1990. (Source)

2013 CAD Crisis: 

• Finance Minister P. Chidambaram implemented the 80:20 rule and raised import duties to 10% to curb a massive Current Account Deficit (CAD). 
• The rules mandated that 20% of all imported gold had to be exported back as jewellery.
• The policy failed as official imports plunged, but illicit networks quickly filled the market void. 
• Smuggling surged to historic highs via neighbouring countries, and consumer demand rebounded sharply the moment restrictions were lifted in 2014

Now, if legally enforced restrictions on the buying of gold by the government failed, a voluntary request in 2026 will likely have even less structural impact, logically.

Who Should Actually Pay Attention to the Prime Minister’s Appeal?

This is the nuance that most media channels are missing right now, and it matters enormously for jewellery brands.

In my opinion, there are three different groups here which will be impacted differently.

• Investment-Driven Buyers: This group treats gold as a financial asset or wealth hedge. They are highly likely to defer fresh purchases for the year, diverting capital into diamonds, equities, or digital assets, which directly reduces bulk bullion trading volumes.
• Wedding & Ritual Buyers: This segment buys gold out of absolute cultural necessity for weddings and milestones. Because their demand is non-discretionary, they will not stop buying altogether; instead, they will reduce the total grams purchased to fit fixed budgets.
  
• Jewellery Brands: Large retailers are bypassing the need for fresh gold imports by banking on consumer recycling. Major players like Kalyan Jewellers and Malabar Gold & Diamonds have launched recycling initiatives and lightweight collections to maintain store footfalls using idle household gold.

If you really think about it, the next wedding season is not going to look at a Prime Minister’s speech and reschedule their “Shaadi ke gehne khareedne ka time”.

What Jewellery Businesses in India Should Focus On?

Here is where I want to be direct with every jewellery brand owner, senior associate or even a jewellery enthusiast reading this. 

Yes, discretionary and impulse gold purchases will dip. Footfall may soften in the short term. Investors will sit on the sidelines for a few months. That is real, and you should plan for it.

But going quiet is the worst thing you can do right now.

The brands that will win the next 12 months are the ones that shift their strategy rather than freeze it. Here is exactly what that looks like.

Lead with the redesign conversation. 

When people pause on buying new gold, they turn to what they already own. India has an estimated 25,000 tonnes of gold sitting in household vaults, the largest private stockpile of gold in the world. 

Families who are not buying new are thinking about remodelling and redesigning old. This is a massive opportunity that almost nobody in the organised jewellery sector is actively chasing. Be the brand that starts that conversation now.

Double down on bridal. 

Not only is this segment insulated from the appeal, but families who were planning to buy across multiple occasions over the next year may consolidate their purchasing into the single most non-negotiable event: the wedding. Bridal is your anchor. Treat it like one.

Stay visible while competitors go silent. 

Demonetisation in 2016. COVID in 2020. Every gold duty cycle in between. The brands that partnered with a strategic digital marketing agency and maintained media presence and communication during the dip were the ones that captured disproportionate share when demand returned. Your competitors are currently spooked. That is your window.

The jewellery industry has survived the Gold Control Act, demonetisation, the pandemic, and multiple duty changes. Each time, it has come back stronger. 

Modi’s appeal is a macro signal. It is not a market-moving policy. Do not let it rewrite your brand strategy.

Stay bullish. Stay present. And whatever you do, do not go quiet. That is my advice

Conclusion

I have seen jewellery brands survive demonetisation, the pandemic, and multiple duty hikes. Every time, the stronger brands were not the ones that panicked or discounted heavily. They were the ones who stayed calm, understood their customers, and used the slow phase to build clarity.

This moment is no different.

Do not rebuild your business around a voluntary appeal. Do not cut prices just to chase temporary footfall. And do not disappear because the news cycle feels uncertain.

Vasim Samadji

Vasim Samadji is a partner at Flora Fountain, where he leads the Business and Marketing Strategy divisions. In a world where everyone is used to sugarcoating, his directness is often considered rude. But that shouldn't be a problem if you like the no-nonsense approach. Because he is a seasoned professional...