Summary of this article
PM Modi urged people to save fuel and avoid non-essential gold purchases for a year amid rising global oil prices
Higher oil and gold imports increase pressure on India’s rupee and foreign exchange reserves
Gold imports have already fallen sharply due to supply disruptions and tax-related uncertainty
India has so far avoided the full impact of rising global crude oil prices, but concerns are beginning to grow. As tensions in West Asia disrupt global energy markets, crude oil prices have seen a sharp surge in recent weeks. This has increased concerns about inflation, pressure on the rupee, and a higher import bill for India. The impact is also being seen in shipping costs, fertiliser prices, and global supply chains.
India imports nearly 85 per cent of its crude oil needs. So, whenever oil prices rise significantly, it usually puts pressure on inflation, government finances, and the country’s foreign exchange reserves.
Amid these concerns, Prime Minister Narendra Modi on May 10 made a strong appeal to citizens to save fuel and postpone buying “non-essential” gold for a year.
Addressing a rally in Secunderabad, Telangana, PM Modi urged citizens to reduce petrol and diesel consumption, use public transport and electric vehicles more frequently, revive work-from-home practices adopted during the pandemic, and prioritise domestic products. “Petrol-diesel has become so expensive across the world. It is the responsibility of all of us that the foreign exchange spent on purchasing petrol-diesel should also be saved by conserving petrol-diesel,” the Prime Minister said.
The Prime Minister also recalled habits people adopted during the Covid-19 pandemic.
“During the Corona period, we adopted work from home, online meetings and video conferences. We had become used to these systems,” Modi said. He added that restarting such practices would help reduce fuel consumption and would be in the national interest.
But among all his appeals, one call especially caught attention. “I would appeal to people not to buy gold for weddings for one year,” the Prime Minister said.
Why Is Gold Becoming A Concern Now?
India imports most of its oil and gold and pays for both in US dollars. So, when global oil prices rise, India has to spend more dollars on crude imports. If gold imports also stay high at the same time, the pressure on the country’s foreign exchange reserves increases further.
According to data from the Ministry of Commerce and Industry, gold is one of India’s biggest import items after crude oil, with imports worth nearly $72 billion in FY26.
Unlike oil, gold is not considered an essential import for the economy. Economists usually see it as spending for savings or personal use.
So, during global crises or periods of uncertainty, governments become cautious about high gold imports because they lead to higher dollar outflows without helping economic production directly.
How Can Gold Buying Affect The Rupee?
India is one of the world’s biggest gold consumers but produces very little gold domestically. According to estimates cited by the World Gold Council, the country imports more than 90 per cent of the gold it uses every year.
So, when people buy more gold, India has to spend more US dollars on imports. This increases the outflow of foreign currency and can widen the current account deficit, the gap between what India imports and exports.
A higher current account deficit can put pressure on the rupee and weaken the currency.
The concern becomes bigger when oil prices are also high, because India is already spending heavily on crude oil imports. The ongoing West Asia conflict has further raised worries by increasing global oil, fertiliser and shipping costs.
How Has Supply Disruptions Hit Gold Imports
Interestingly, the Prime Minister’s appeal has come at a time when India’s gold imports are already falling sharply. According to a Reuters report, India’s gold imports are estimated to have dropped to around 15 metric tonnes in April 2026, among the lowest monthly import levels seen in nearly three decades outside the Covid period.
The fall in imports has mainly been caused by supply issues, rising gold prices in India, and uncertainty around taxation on imports.
Reuters reported that bullion imports were disrupted after customs authorities raised an unexpected demand related to Integrated Goods and Services Tax (IGST) on shipments. This reportedly led several banks to temporarily stop imports.
Earlier in April, the Directorate General of Foreign Trade (DGFT) allowed 15 banks to resume gold and silver imports after shipment delays, Reuters reported.
Frequently Asked Questions
1. Why did PM Modi ask people to avoid buying gold for a year?
PM Modi urged people to avoid non-essential gold purchases to help reduce pressure on India’s foreign exchange reserves amid rising global oil prices and geopolitical tensions.
2. How are gold imports linked to oil prices?
India imports both crude oil and gold in US dollars. When oil prices rise and gold imports remain high, the country has to spend more dollars on imports, increasing pressure on the economy and the rupee.
3. How are gold imports linked to oil prices?
India imports both crude oil and gold in US dollars. When oil prices rise and gold imports remain high, the country has to spend more dollars on imports, increasing pressure on the economy and the rupee.
