Modi’s Gold Warning Sparks Tariff Fears, Jewellery Stocks Tumble

Indian jewellery stocks fell sharply on Monday after Prime Minister Narendra Modi urged citizens to avoid buying gold for a year to help conserve foreign exchange reserves. The remarks, made amid soaring oil prices linked to the Iran conflict, raised concerns that the government could increase import duties on gold to reduce pressure on India’s balance of payments and weakening rupee.

Shares of major jewellery retailers including Titan Company, Senco Gold and Kalyan Jewellers dropped between 6% and 9%. Industry officials warned that import duties on gold could be raised again, similar to measures taken in 2012 and 2013 when India increased tariffs to stabilise the rupee. India currently imports nearly all of its gold demand, largely driven by weddings and gifting traditions.

Despite market fears, a government source said there are no plans to raise duties on gold and silver imports. However, pressure on the Indian economy continues to mount as oil prices surge and the rupee hits a record low against the U.S. dollar. Fuel retailers are also facing losses as petrol and diesel prices have remained unchanged since 2022 despite rising global crude costs.

Pic courtesy: google/ images are subject to copyright