India PM Urges Citizens to Cut Gold Purchases, Foreign Travel to Shield Forex Reserves

Prime Minister Narendra Modi has appealed to Indians to reduce gold purchases and postpone foreign travel to save dollars and protect India's foreign exchange reserves, amid rising crude oil prices and pressure on the rupee. India's forex reserves are around $690.69 billion, according to data compiled by Trading Economics, and the country imported around $72 billion worth of gold in FY26, which is a 24% jump from the previous year.

India is the world's second-largest gold buyer, and most of this gold is imported, with every ounce paid for in dollars. The country's total import bill in FY26 was $775 billion, with four commodities - crude oil, gold, vegetable oils, and fertilizers - costing over $240 billion.

Reducing gold purchases can directly reduce India's dollar outflow by tens of billions, with a 30-40% fall in gold imports saving $20-25 billion, and a 50% fall saving $36 billion. This can help mitigate the pressure on the rupee and forex reserves, particularly during times of geopolitical tensions such as the US-Iran war.

The appeal has triggered reactions across several key sectors of the economy, including travel and airlines, hotels and hospitality, and petroleum and fuel-linked sectors. Analysts have flagged sentiment weakness in markets, with airlines and travel-related stocks cooling off, and luxury hotels and resorts feeling pressure due to reduced foreign travel.

The government's next steps will involve monitoring the impact of the appeal on gold imports and forex reserves, and potentially implementing further measures to support the rupee and reduce the current account deficit. The Reserve Bank of India will also be watching the situation closely, as it manages the country's forex reserves and monetary policy.