Modi’s Call to Curb Gold Buying Could Help Protect Forex Reserves, Experts Say

SURAT, India — Prime Minister Narendra Modi’s appeal to reduce non-essential gold purchases could help India conserve foreign exchange reserves at a time of rising import pressure, industry experts said Monday.

Gold should not be viewed only as a consumption item, experts said, but also as a central part of India’s culture, household savings, financial security and women’s economic empowerment.

Nainesh Pachchigar, Gujarat president of the India Bullion and Jewellers Association, said Modi’s appeal could help reduce foreign exchange outflows amid global uncertainty. However, he said the government should also revive the old Gold Monetisation Scheme to bring idle household gold back into circulation and increase recycling.

“Such a move would help maintain steady work for lakhs of small and medium artisans associated with the jewellery sector while supporting the government’s broader goal of reducing foreign exchange outflow,” he said.

Pachchigar said any effort to reduce gold imports should account for the jewellery sector’s large workforce.

“The jewellery industry is deeply linked with the livelihoods of millions of craftsmen across the country and any effort to reduce gold imports should be balanced in a way that does not hurt the sector’s economic ecosystem,” Pachchigar added.

He said the association plans to submit a proposal to the government outlining measures to save foreign exchange without hurting artisans and jewellery businesses.

Renu Arora, director of JCBL Group and a chartered accountant, also supported Modi’s appeal. She said India remains heavily dependent on imports for gold and crude oil, and large import bills place pressure on the rupee.

“The country’s economy becomes vulnerable whenever international crude oil and gold prices rise sharply,” she said, adding that reducing unnecessary consumption would help India withstand global shocks and improve macroeconomic stability.

Manoj Kumar Jain, director and head of commodity and currency research at Prithvi Finmart, said India accounts for nearly 25% to 26% of global gold demand and imports about 800 metric tons of gold annually, requiring major dollar outflows.

“All imports are paid for in foreign currency, mainly the US dollar, leading to significant pressure on India’s foreign exchange reserves,” he said.

Jain said geopolitical tensions, especially between the United States and Iran, have pushed global energy prices higher, further increasing India’s import burden. (Source: IANS)