Prime Minister Narendra Modi’s recent appeal for Indians to refrain from purchasing gold for a year due to economic challenges attributed to the West Asia crisis has instigated significant anxiety within India’s jewellery and bullion markets. This call comes at a critical time when the sector relies heavily on festive and wedding-related demand, prompting traders and jewellers to fear potential declines in sales and adverse effects on employment.

Locations such as Mumbai’s renowned Zaveri Bazaar, Delhi’s Chandni Chowk, and Kolkata’s Bowbazar showcase the widespread concern among jewellers and traders. Many worry that the Prime Minister’s remarks might unsettle consumers, particularly during a peak purchasing period when demand for gold typically surges.

Brijesh Goyal, Chairman of the Chamber of Trade & Industry (CTI), highlighted that India consumes approximately 700 to 800 tonnes of gold annually, making it one of the world’s largest gold consumers. Should consumer purchases cease for a year, projections indicate a potential decrease in consumption from nearly 800 tonnes to around 500 tonnes.

Concerns for Livelihoods in the Jewellery Ecosystem

The jewellery industry’s apprehensions are exacerbated by the timing of the appeal coinciding with the wedding season, when jewellers usually experience robust demand for gold ornaments and coins. Small-scale jewellers, goldsmiths, and karigars face the prospect of significant income loss. Goyal noted that many in the sector could struggle to pay workers’ salaries, escalating the risk of layoffs should demand continue to wane.

Moreover, critical buying occasions like Dhanteras, which substantially contribute to annual gold sales, are now under threat due to this announcement. In India, cultural ties to gold are profound, intertwined with weddings and family savings, making such appeals detrimental to consumer confidence.

According to estimates, the jewellery sector could see losses exceeding Rs 10,000 crore if the Prime Minister’s statement results in extended demand suppression. In response, the CTI has requested a meeting with the Prime Minister to discuss these pressing concerns directly with stakeholders in the jewellery sector.

Market Experts Weigh In on Future Gold Demand

Despite the rising fears within the jewellery industry, market analysts suggest that the government’s concerns over escalating gold imports are primarily rooted in mounting pressures on India’s external balance. Analysts think that a temporary decline in gold consumption could yield longer-term economic benefits, particularly by addressing the current account deficit.

Dr Renisha Chainani, Head of Research at Augmont, pointed out that India imported nearly $72 billion worth of gold in FY26, marking a record high. With the International Monetary Fund predicting India’s current account deficit at $84.5 billion in 2026, the necessity for these measures becomes more apparent.

While some customers have begun to defer significant gold purchases awaiting clarity on potential government actions regarding imports and taxation, experts remain sceptical about a total collapse in demand. Chainani stated that buying patterns associated with key events like Akshaya Tritiya and Dhanteras would continue despite the Prime Minister’s appeal, highlighting the integral role of gold in Indian households.

For numerous small jewellers, artisans, and workshop employees, the predominant concern remains the potential drop in consumer confidence, which could translate into a broader livelihood crisis in the coming months. Addressing these concerns promptly will be essential to safeguarding the interests of those reliant on the flourishing jewellery trade.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store –  https://apps.apple.com/in/app/newspin/id6746449540 

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share