At a BJP event in Hyderabad on May 10, 2026, Prime Minister Narendra Modi made an appeal. With the US-Iran war disrupting global oil supply chains and crude prices surging, Modi asked citizens to avoid buying gold and travelling abroad for at least one year, framing both as acts of economic patriotism.
"Patriotism is not only about the willingness to sacrifice one's life on the border," he said. "In these times, it is about living responsibly and fulfilling our duties to the nation in our daily lives."
India imports nearly 85 per cent of its oil from overseas and is one of the world's largest buyers of gold, both entirely priced and settled in US dollars. Every gold ornament bought at a jewellery and every international flight ticket dips into the same foreign exchange pool.
India's forex reserves stood at a healthy $691.11 billion at the end of March 2026, providing import cover of nearly 11 months, but the West Asia crisis is now testing that cushion in real time. "We have to save foreign exchange by any means," Modi said plainly.
Even as the PM asked citizens to stop buying gold, the Reserve Bank of India has been doing what seems to be the opposite: steadily accumulating bullion as a deliberate reserve diversification strategy. India's sovereign gold holdings grew from 794.64 metric tonnes in September 2025 to 880.52 metric tonnes by March 2026.
In the same period, gold's share of India's total forex reserves jumped from 13.92 per cent to 16.7 per cent. More than two-thirds of this gold, 680.05 metric tonnes, is now stored within India after years of quiet repatriation from overseas vaults.
But these two distinct "gold buying" should not be confused. The PM's appeal targets private gold imports, the jewellery and investment demand that drains dollar reserves through commercial channels. The RBI's gold accumulation, by contrast, is a sovereign strategy to reduce dependence on the US dollar and hedge against geopolitical risk. It is part of a long-term strategy to tackle a crisis like the one unfolding in West Asia.
The RBI buys through mechanisms that typically bypass the same dollar-outflow channel that private imports use.
Modi's broader appeal extended beyond gold and travel: use the metro, work from home, carpool, cut edible oil consumption, prefer Made-in-India goods, and, for farmers, halve the use of chemical fertilisers and switch to solar-powered irrigation pumps.
However, analysts have already seen the writing on the wall. India's external balance sheet is under pressure, and the government cannot manage it alone. Indian markets have been in the red throughout Monday trade, with the Sensex shedding at least 1,000 points on average.
