PM Modi urges Indians to avoid buying gold to curb trade deficit and support rupee

Indians should avoid buying gold unless necessary, Prime Minister Narendra Modi said, renewing an appeal to curb bullion demand as a widening trade deficit and weaker rupee strain the economy.

Modi's comments come amid local media reports that the government is considering cutting import duties on gold and silver after higher levies failed to curb inflows. It's his second such appeal this year, after he asked Indians in May to refrain from buying gold for at least a year to conserve foreign-exchange reserves.

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Gold is India's biggest imported commodity after oil and a major contributor to the trade deficit. Imports of the metal surged more than 32% from a year earlier in the first four months of the financial year that began in April, adding pressure on the rupee. The trade deficit widened to almost $32 billion in July, the highest since January.

"If there's no need, don't buy gold," Modi said in a video posted on X. With wars disrupting global supply chains, India needs greater self-reliance to sustain economic growth, he said, urging people to buy local products and avoid overseas travel for tourism and weddings.

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India is the world's second-largest bullion buyer and relies almost entirely on overseas supplies to meet demand. Gold plays a vital role in savings, weddings and religious festivals in the country.

Reports of a potential duty cut have fuelled volatility in domestic gold prices. The government hasn't publicly indicated whether a reduction is imminent. In May, India more than doubled the levy on gold and silver to curb physical demand.