Prime Minister Narendra Modi has issued a direct appeal to citizens to exercise restraint in gold purchases and fuel consumption as a patriotic duty to protect India's foreign exchange reserves. Addressing a public rally in Secunderabad, Telangana, PM Modi called upon families to avoid buying gold — especially for weddings and other functions — for at least one year to reduce pressure on forex outflows. The Prime Minister specifically urged citizens to treat economic resilience as a 'national responsibility' amid rising global oil prices due to the West Asia conflict. He also encouraged reviving pandemic-era practices such as work-from-home arrangements, virtual meetings, and online conferences to significantly cut petrol and diesel consumption.
The National Stock Exchange (NSE) launched Electronic Gold Receipts (EGRs) on 4 May, while Dhan, a broker, launched a gold vault on 29 April. According to reports from Stock Market News, these regulated digital gold products promise real-time priced high-purity gold without storage hassles. In NSE's EGR offering, gold is held in demat form and can be converted into electronic receipts traded on the stock exchange, available in denominations from 100 milligrams to 1 kilogram. Dhan's gold vault provides access to 999 purity gold in sizes as small as 1 gram, settled with Multi-Commodity Exchange (MCX) prices.
The products face significant practical challenges in physical delivery. As reported by Stock Market News, for EGRs, individuals must collect gold from limited vaults or branches, potentially requiring long-distance travel. There are only two vault managers in India - Sequels Logistics Pvt Ltd and Brinks' India Pvt Ltd. Sequel has branches in only 75 cities, while Brinks' number is not known. Amit Sahita, director at Fincode Advisory Services Pvt, noted that for the average Indian investor, traveling to collect 10-15 grams of gold from another city becomes cumbersome. Dhan offers doorstep delivery after payment of delivery charges, but investors still need to approach jewellers for conversion into jewelry.
The government has taken decisive action to address mounting gold import pressures, with import duty on gold, silver, and platinum increased from 6% to 15% to control rising gold imports. According to recent reports, gold imports may soon cross $100 billion, putting significant pressure on India's economy, foreign exchange reserves, and the Indian rupee. This policy response comes as foreign reserves have already dropped from $728 billion to $691 billion, highlighting the urgent need for measures to reduce import dependence and strengthen the country's economic position. PM Modi's latest appeal represents an escalation of these efforts to conserve foreign exchange amid ongoing global uncertainties.
According to World Gold Council data reported by Stock Market News, India's gold demand in Q1FY26 was $25 billion. Gold prices have surged 122% over the last two years on the MCX, as per Bloomberg data. Jay Gupta, chief operating officer at Dhan, highlighted that retail investors previously had no access to real-time transparent pricing, as gold prices are typically updated once daily and remain static throughout the day. The products offer 995 and 999 purity gold, higher than the 22-carat gold commonly used in jewelry. PM Modi's appeal comes as India, a major importer of both crude oil and gold, faces potential economic challenges from ongoing global uncertainties.
