Prime Minister Narendra Modi’s advisory to citizens on gold purchases has so far not changed gold sales and customer numbers much, though it has affected consumer sentiment and put some buyers on a cautious or wait-and-see mode, gold traders told The Hindu on Thursday.
They said it is too early to predict a clear trend and it may take several weeks to months for a solid trend in gold sales to emerge.
C. Vinod Hayagriv, Managing Director, C. Krishniah Chetty Group, noted that gold buyers were actually saying it was unfair to ask them to reduce their jewelery spending. “They sympathize with the Prime Minister but are unhappy when he tells them to reduce their expenditure on jewellery,” he said, adding that the outlets had not seen any reduction in sales of gold jewelery following the Prime Minister’s advice.
Gaurav Singh Kushwaha, founder and CEO of BlueStone Jewellery, said that India has always considered gold to be more than just a discretionary purchase; it was deeply associated with culture, weddings, gift giving and the creation of long-term values. “Currently, the markets have not seen any significant impact of the advisory on customer sentiment or impact,” confirmed Mr. Kushwaha.
According to TA Sharavana, president of Karnataka Jewelers Association, owner of Shree Sai Gold Palace and former MLC, the prime minister’s call was aimed at investments in precious metals and not at individual buyers buying gold jewelery and ornaments. “Gold jewelery and ornaments are part of our heritage, culture and celebrations and this will continue,” Mr Sharavana said.
He further noted that the high taxation of gold imports hurts the most. This would impact both buyers and merchants. A high gold price would also lead to a black market and illegal trade in gold and precious metals, he warned.
MP Ahammad, chairman of the Malabar Group, said India has one of the world’s largest privately held gold reserves, while still relying heavily on imports to meet domestic demand.
He said a greater focus on recycling, exchange, reuse and monetization of existing domestic gold could play an important role in reducing import dependency, curbing dollar outflows and strengthening India’s economy in the long run.
“Mobilizing even 1-2% of India’s domestic gold could potentially release nearly 600-700 tonnes of gold into circulation, which is a substantial part of the country’s annual gold demand,” Mr Ahammad said.
Malabar Gold & Diamonds recently submitted a proposal to the Union government recommending strategic improvements to the Gold Monetization Scheme (GMS).
The proposal, presented to Finance Minister Nirmala Sitharaman and Commerce and Industry Minister Piyush Goyal, outlines practical measures aimed at increasing public participation in GMS, mobilizing idle gold into the formal economy and promoting greater recycling, reuse and circulation of existing gold in India.
Gems and Jewelery Export Promotion Council (GJEPC) Chairman Kirit Bhansali noted that the most severe impact of the recent tariff hike will be felt by MSME manufacturers who constitute 80% of GJEPC members who are currently facing a critical liquidity crunch.
“The GJEPC’s consistent position is that raising import duties rarely curbs gold imports – it only increases prices. Despite gold prices doubling recently, imports have not fallen commensurately. Such measures often encourage smuggling and escalate export costs,” he warned.
The GJEPC recently called on the government to engage in dialogue on sustainable solutions that align fiscal targets with export growth. “We have written to the Prime Minister to outline proactive measures from our members to curb gold imports and enhance self-sufficiency,” Mr. Bhansali added.
City-based jeweler Girish Ramanathan of Ikaksh Jewels said the councils tend to make people cautious and make more informed decisions, but in India jewelery is not just about investment – it is also about celebrations, culture, weddings, anniversaries, holidays and gifts. Commenting on the gold market outlook for FY27, he said the trend will shift towards need-based purchases with a preference for lightweight jewellery, a pattern already visible among new generation consumers who are opting for low-cost purchases.
According to Prithviraj Kothari, managing director of RiddiSiddhi Bullions and president of the India Bullion and Jewelers Association, large retail chains have not seen a significant drop in the field, suggesting that the initial impact of the advice was more psychological than transactional. However, he said FY27 presents a bifurcated outlook.
Aarav Bafba, director, Akoirah By Augmont, believes that while the recommendations may affect short-term sentiment, demand for gold fundamentals in India will remain strong. “Over the next year, buying patterns may become more cautious, but overall demand is expected to remain stable during the festive and wedding season,” he added.
One interesting trend we’re seeing is that more and more people are exploring exchange and recycling options and trying to make the most of their existing gold, given how prices have been moving, noted Sunny Singh, founder of DAIMANTÉ. “We are cautiously optimistic on the long-term horizon, although FY27 could be a mixed bag given price volatility, evolving politics and global factors affecting imports,” Mr Singh added.
Prakhar Jalan, director of Vasundhra Jewellers, said Indians’ affinity for gold was deep and culturally ingrained. “More than advisory, the high gold duty of 6% to 15%, which has pushed prices close to ₹10,000 per 10 grams, may hurt the industry more.”
Mr. Hayagriv went on to talk about precious metals: “I strongly emphasize that investment in dead precious metals must be curbed as they do not contribute to the economy. We have seen loss of investment in precious metals since January due to volatility. Gold is a commodity. It is not an investment avenue. Where do we see someone hoarding steel, manganese, copper, etc., which will lead to an increase in import duty on gold, etc.? diseases.”
Mr. Sharavana said individual consumers should stop buying gold biscuits and pieces, which can reduce 50% of the country’s gold sales. “Perhaps the government should introduce a regulation to discourage individuals from buying precious metals and crackers as investment options,” he suggested.
