India worships gold like a deity, imports it like a drug, and many prime ministers have tried convincing people to postpone purchases and save foreign exchange that can be diverted to energy security.
BY TN Ashok
It takes a certain political courage — or perhaps breathtaking optimism — for an Indian prime minister to stand before a nation of 1.4 billion people and suggest, with a straight face, that they might consider buying a little less gold. Better still postpone the purchase for the yellow metal . And also defer foreign travel , both of which bleed the country’s carefully accreted foreign exchange of nearly $700 billion , nowhere near Chinas’ $3 trillion.
But believe it or not – India is the biggest consumer, hoarder and purchaser of gold. Gold imports touched a high of $72 billion for a metal that sits quietly in safety vaults of state owned banks, war chest of wealthy families and upwardly mobile tech savvy gen z and millennials who believe buying gold is the best hedge against inflation.
More shocking is that there are over 1,00,000 gold retailing stores spread across the country , mostly in southern states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh , and Telangana. Gold buying is done throughout the year and especially on the festive occasion of Akshaya Tritiya when people queue up before shops to buy gold — believing in the myth that buying Gold on this day will make them more wealthy.
India sits on 25 to 30,000 tonnes of home held gold locked up in PSU banks and war chests of wealthy families and the new gen Indians who hold destination weddings in Thailand instead of in Chennai or Bengaluru or Hyderabad. For families keeping gold at home is security and flaunting gold and diamonds at weddings and festive occasions is making a statement about your social standing.
Gold glitters , attracts attention but earns nothing in the immediate present or future for either the home or the government. For economists it’s a wasteful expenditure. For the government, cutting it down is getting more foreign exchange for reinforcing the Energy Security for the country. India has spent $100 billion or Rs 90,000 crore on crude imports and petroleum products to keep the nation’s line in transportation going.
Add to this the $72 billion in gold imports in just the 1st half of the FY 2026-27 fiscal and the first three months of calendar 2026, its enormous amount . Oil imports lights up homes, energises factories, manufacturing, powers supply chains and supports logistics ports and highways that transport life saving medical supplies and groceries for the kitchen table.
What does gold do? NOTHING. So PM Modis impassioned appeal to buy less gold or postpone purchases besides defer foreign travel and travel only if you must, is something what any sensible Prime Minister would do. But Modi has not done anything new. He just borrowed from the playbook of the then Prime Minister Indira Gandhi who faced a similar economic crisis in terms of balance of payments position in the early 1970s. But Mrs G who had tremendous charisma did not evoke a great response.
Will the charisma of Prime Minister Narendra Modi who made the people take plates and clang, and people who followed every appeal of his through his three terms from 2014, heed this appeal.?
Narendra Modi, a man not typically short of courage, gave it a go. As global markets shuddered and the rupee came under pressure earlier this year, Modi made a public appeal for austerity: Indians, he suggested, ought to temporarily restrain their gold habit to ease pressure on foreign exchange reserves. It was a reasonable economic argument, carefully worded, and delivered with the full authority of the world’s most popular elected leader.
India showed lukewarm response initially, but let’s see if the message sinks in for a better response from the educated people who understand the aftermath of the Iran War devastating India’s economy.
In the first quarter of 2026 alone, Indian households snapped up 151 tonnes of gold, according to the World Gold Council — investment demand actually overtaking jewellery purchases for the first time on record, as if the country had decided that Modi’s austerity appeal was itself a buying signal. The nation that imports nearly all of its crude oil and virtually none of its gold domestically somehow concluded that this was the moment to load up further on the yellow metal.
The prime minister, one might note, was not amused. But then, neither was Indira Gandhi — and she tried this plan decades ago.
The Oldest Trick in the Indian Political Playbook
Modi’s appeal was a rerun of a very old film. Indira Gandhi, governing a country perpetually teetering on the edge of a balance-of-payments crisis, made similar patriotic appeals to citizens during periods of economic distress. She asked them to contribute gold to the national cause. The response was underwhelming. Indians listened politely, nodded gravely, and then went straight to the nearest jeweller.
The 1991 crisis was even more instructive. India came within weeks of sovereign default. The government of the day was forced to physically airlift 67 tonnes of gold from the Reserve Bank’s vaults and pledge it as collateral to the Bank of England and the Union Bank of Switzerland in exchange for emergency loans. The country’s gold reserves were literally flown out of the country to keep the lights on.
Ordinary households? They held on to every gram. It was Narasimha Rao and Dr Manmohan Singh who made that sacrifice to build a country of economic resilience during the global meltdown of 2008 , Covid 19 pandemic with their liberalised economic policies. All the gold came back. Foreign exchange boomed in the vaults of RBI. Can we afford to lose this by importing more gold? 67 tonnes of gold were airlifted to the Bank of England and Canada to act as collateral to clear global institutional loans with interest.
PM Modi’s appeal carried : No moral pressure, no appeals to patriotism, no economic argument .However compelling — no government appeal however meaningfull shifted India’s relationship with gold. Every government eventually discovers the same immovable truth and files it away in the drawer marked “problems for the next fellow.”
The Numbers That Should Cause Alarm (But Don’t)
Let us be precise about the scale of India’s golden affliction, because the numbers deserve to be read slowly and without blinking.
India consumes between 700 and 900 tonnes of gold every year, making it one of the world’s two largest gold markets alongside China. Since Modi first came to power in 2014, India is estimated to have imported more than 8,000 tonnes of gold — at prices that have roughly tripled over the same period. Between 2000 and 2014, imports crossed 10,000 tonnes as liberalisation, rising middle-class incomes and an ever-expanding wedding calendar drove consumption to staggering levels.
Almost none of this gold is produced domestically. India mines a negligible quantity. Every tonne must be purchased with hard-won foreign exchange — the same dollars that could otherwise be deployed to secure long-term energy contracts, fund infrastructure imports, or reduce the country’s chronic dependence on imported crude oil.
India spends approximately $100 billion annually on crude oil imports. It spends another $40–$50 billion on gold. Together, these two commodities account for the single largest drain on India’s current account. The difference is that crude oil keeps factories running, hospitals lit and cars moving. Gold, overwhelmingly, goes into bank lockers, wedding chests, and temple vaults, where it sits — immobile, unproductive, and deeply beloved — for generations.
The country privately holds an estimated 25,000 to 34,000 tonnes of gold — a treasure worth over $3 trillion at current prices. No government on earth has successfully unlocked a meaningful portion of it.
Southern India: Where Gold Is Not a Choice, It’s a Theology
If the rest of India treats gold as a sound investment with religious overtones, southern India treats it as something considerably more serious. Tamil Nadu, Kerala, Karnataka, Andhra Pradesh and Telangana constitute India’s gold heartland — together accounting for a disproportionate share of national jewellery demand that their combined population share simply does not explain.
A middle-class wedding in Tamil Nadu or Kerala routinely involves between 100 and 500 grams of gold jewellery gifted to the bride alone. At current prices, that is ₹10 lakh to ₹50 lakh changing hands in ornamental form. Wealthier business families, unconstrained by such modest notions of sufficiency, sometimes give over a kilogram. That costs million in rupees and defines the social standing of the bride’s father even if he begged, borrowed or stole that gold.
Kerala’s gold obsession carries its own special intensity, forged in the crucibles of Gulf migration. When Malayali workers departed for Dubai and Riyadh in their hundreds of thousands from the 1970s onwards, they brought remittances home — and with those remittances came the gold-buying habits of the Gulf souks. Dubai, whose gold market exists partly because of Indian demand, and whose airport departure lounges have for decades functioned as an informal annexe of the Indian jewellery trade, was happy to oblige.
Whenever New Delhi raises import duties in an attempt to choke demand — as it has done repeatedly — Dubai simply becomes more attractive, and the smugglers do a roaring trade. Industry estimates suggest between 80 and 150 tonnes of gold enter India illegally every year during high-tariff periods. Kochi, Kozhikode, Chennai and Mumbai airports have become theatres of an endless customs farce: bars concealed in pressure cookers, hollowed-out shoes, specially tailored undergarments. The 2020 Kerala diplomatic gold smuggling case — where gold was allegedly transported through UAE consulate baggage — managed to combine audacity with a certain poetic appropriateness, given the direction of the smuggling flows.
There are reports that the government has slapped a 15% additional duty on gold imports to discourage gold imports. It is also considering raising the prices of fuels such as petrol, diesel and others to raise revenues to buy the high cost oil from the gulf.
The South Korean Question India Cannot Answer
In 1998, South Korea faced an economic crisis of comparable severity. The government appealed to citizens to donate their gold to national reserves. South Koreans queued up. They handed over jewellery. Grandmothers brought wedding rings. The collection drive raised over $2 billion worth of gold from private hands. It became one of history’s more remarkable examples of collective economic solidarity.
The question of whether Indians could ever replicate that sacrifice is, in polite circles, answered diplomatically. In honest ones, the answer seems to be a NO in the immediate future , not because Indians are uniquely selfish or unpatriotic. The reasons are structural and historical.
Gold in India is not decoration. It is the only form of wealth that millions of families — particularly women with no independent income or legal property rights — have ever truly controlled. A gold bangle cannot be seized by a defaulting husband or an indifferent bank. It requires no documents, no intermediary, no functioning legal system. It is wealth that belongs to its owner absolutely, in a society where very little else does.
Modi knows this. Every Indian prime minister has known it. And every one of them has eventually filed the appeal under the same drawer marked “things that look rational from New Delhi and impossible from everywhere else.”
India does not merely love gold. It depends on it — the way a country with long memories of inflation, colonial plunder and institutional failure depends on the one asset the state cannot devalue, confiscate or explain away.
The golden millstone hangs around the nation’s neck. And India, given the choice, would have it no other way. Gold is the albatross around the neck and the Damocles sword hanging over the government, only people can help dismantle it.
On the question of deferring foreign travel , that seems a good possibility that many Indians will postpone foreign travel . But, those who are booking half way through, they are not likely to abandon it — fear that the rupee that’s now traded at Rs 95 to a dollar could jump to Rs 100 plus to a dollar could make them run to the ticketing agency to complete the deal. That’s the harsh reality.
It’s a complex situation and a moral dilemma for both the people and the government. Some travel agencies such as Cox & Kings, SOTC, Thomas Cook report that many Indians have diverted their foreign travel to either holy places like Rishikesh or Varanasi or exotic destinations to havelis in Rajasthan or Gujarat or the temples of Southern India like Tamil Nadu in Madurai or Chennai.
Here’s a closer look at how Indians travel after the 90s liberalisation drive by Rao+Singh govt that pushed up the aspirations of the millenials and Gen Z holding high paying tech jobs in India’s silicon valley. Here is the thing.
The Great Indian Exodus: Upwardly Mobile Indians and the Global Tourism Boom
India’s burgeoning middle class has discovered the world — and the world is rolling out the red carpet. From the snowy Alps of Switzerland to the golden temples of Thailand, from the ancient pyramids of Egypt to the baroque palaces of Austria, the upwardly mobile Indian traveller has become one of the most coveted tourists on the planet. And rightly so — the average Indian traveller spends $1,200 per international visit, far surpassing Americans at $700 and the British at approximately $500, according to the UNWTO’s report on the Indian Outbound Travel Market.
The Numbers Tell the Story
In 2023, a total of 27.3 million Indians travelled abroad, reflecting an impressive 26.25% increase from 21.6 million in 2022. The momentum has only accelerated since. In the financial year 2024–25, Indian citizens made an estimated 31.7 million trips abroad, spending over USD 31.7 billion overseas — a 25% increase in travel compared to the previous year. No nation’s outbound tourism market is growing faster, and in response to this rapidly expanding travel boom, Indian airlines ordered record numbers of new planes in 2024. FactoData + 2
In 2023, the outbound tourism market in India was valued at INR 2.14 trillion and is expected to reach INR 5.01 trillion by 2030, expanding at a compound annual growth rate of 14.27% during the 2024–2030 period, with the number of international travellers expected to exceed 50 million by the end of the decade.
Who Is the Indian Traveller?
The profile of the Indian tourist has changed dramatically. The phenomenon is no longer confined to the wealthy elite of Mumbai and Delhi. The rise in outbound travel from smaller cities is reshaping India’s travel story — places like Indore, Surat, and Gaya, which earlier accounted for a handful of travellers, saw international passenger traffic grow by approximately 175%, 126%, and 48% respectively in 2023–24. The Indian travel market is gigantic, with its middle class now representing 31% of the country’s population. Rising incomes, affordable air travel, easy EMI schemes, and a post-pandemic zeal to explore have turned international holidays into an aspirational lifestyle statement.
Who Benefits — And Where?
The destinations that gain the most from this Indian outbound surge are many and diverse. Top destinations for Indian travellers include Dubai, the United States, Thailand, Saudi Arabia, and Singapore. In 2024, India was the second largest overseas source of tourist arrivals in the US, with total expenditure by Indian tourists in the US standing at approximately
$20 billion in 2023. Over the past decade, Thailand launched 50-plus marketing campaigns specifically for Indian consumers, travel agents, and niche businesses, positioning itself as a top choice for weddings, honeymoons, and leisure. Switzerland, forever romanticised by Bollywood, continues to draw tens of thousands of Indian couples and families each year. Among Gen Z Indian travellers, destinations like Indonesia, Egypt, and Japan rank as top choices for immersive cultural experiences. Austria, with its scenic landscapes and classical heritage, is also firmly on the Indian tourist map.
