Prime Minister Narendra Modi's appeal to citizens to avoid non-essential gold purchases for a year, made in early May 2026, has created significant uncertainty in India's jewellery industry. The immediate market reaction was sharp and swift. Listed jewellery stocks witnessed steep declines on May 11, 2026, with Kalyan Jewellers India falling 9.27%, Senco Gold slipping 8.18%, and Titan Company declining 6.73%. The combined market capitalisation erosion for these companies reached approximately ₹35,000 crore in a single trading session.
However, early ground reports present a more nuanced picture. Jewellers across major markets indicate that the PM's advisory has not yet made a significant difference to customer footfall or actual gold sales. The impact appears to be primarily psychological rather than transactional, pushing some buyers into a cautious or wait-and-watch mode. Industry executives note it is too early to predict clear trends, and it may take several weeks to months for a solid pattern in gold sales to emerge.
Large organised jewellers are characterising the expected impact as a behavioural shift in how demand is met, rather than a contraction in overall demand. The industry is witnessing a bifurcated response. Wedding and occasion-led jewellery demand remains relatively resilient, as gold in India is "not discretionary — it is constitutional to the family balance sheet". In contrast, investment-driven buying is more vulnerable to policy messaging.
A key trend accelerating is the shift toward exchange-led purchases. Consumers are increasingly exchanging old gold for new jewellery instead of making fresh bullion-heavy purchases. Senco Gold reports that almost 50% of its overall business is now driven through recycled gold. This approach allows consumers to maintain gold exposure while reducing fresh import requirements, aligning with both jeweller business interests and national forex conservation objectives.
The interaction between record-high gold prices and PM Modi's gold curb call is creating a complex decision-making environment for jewellers regarding store expansion.
Despite these pressures, major jewellers are continuing with expansion plans, though with clear signs of cautious optimism. New store addition as a percentage of existing stores halved to 11% in FY26 from 20%+ over the previous three years. The cohort of six large, listed jewellers added 310 stores in FY26, representing the second consecutive year of 300+ new store additions.
Capital allocation strategies are shifting toward more capital-efficient models. Expansion through the franchisee route remains the preferred mode, considering its benefits in terms of lower incremental inventory funding requirements. The share of franchisee stores in overall retail presence is estimated to increase to 62% in FY26 from less than 60% in FY23. Kalyan Jewellers India uses the FOCO (Franchise Owned Company Operated) model, which allows franchisees to fund store capex while the company operates the store, enabling 25-30% revenue growth without proportional capex commitment.
The India Bullion and Jewellers Association (IBJA) has strategically aligned itself with the government's gold curb initiative, positioning it as a partner in national interest rather than an adversary. IBJA has explicitly stated that the industry has "decided to stand in support of the government" and is holding meetings nationwide to balance national interest with business continuity.
IBJA acknowledges that gold is the second-largest contributor to foreign exchange outflow from the country, with India importing approximately 800 tons of gold annually. Gold imports hit a record $71.98 billion in 2025-26, rising over 24% from $58 billion a year earlier. To address this, IBJA has proposed monetising approximately 1,000 tons of idle temple gold.
The potential impact is substantial.
At 50% utilisation (500 tons), it would replace 62.5% of annual imports, saving approximately $36 billion. IBJA has clarified that it is not seeking permanent acquisition of temple gold reserves by the government, but rather a mechanism through which idle gold could be monetised while ownership remains with the trusts.
Consumer response to PM Modi's gold curb appeal has been complex and counterintuitive.
Jewellers report a 15-20% rise in gold sales as buyers rush purchases amid fears of higher duties, GST changes, and wedding season costs. This counterintuitive response suggests that consumers are interpreting the PM's appeal as a signal of potential future restrictions or price increases, prompting accelerated purchases rather than deferral.
However, beneath this surface-level surge, deeper shifts are emerging. Consumers are demonstrating a sophisticated shift toward alternative gold investment vehicles. More people are exploring exchange and recycling options, looking to make the most of their existing gold given how prices have moved. Pre-existing trends show consumers shifting from jewellery to bars, coins, and ETFs due to their lower premiums. Gold ETF demand increased 197% year-on-year to 19.9 tonnes in Q1 2026, while bar and coin demand jumped 34% year-on-year to 62.3 tonnes.
The "allure of glitter" in India transcends mere aesthetics, representing a complex interplay of cultural, emotional, and financial factors. Gold in India is not discretionary — it is constitutional to the family balance sheet. Gold jewellery carries emotional, cultural, spiritual, and family significance across generations. Indians' affinity for gold is deep and culturally rooted.
Wedding demand remains consistently strong despite price increases because gold jewellery still carries emotional, cultural, spiritual, and family significance. Families purchasing bridal jewellery often prioritise cultural timing over market timing because weddings, festivals, and traditional ceremonies cannot always be postponed conveniently. Many Indian households view jewellery as wearable wealth that combines emotional value with financial security, unlike purely decorative luxury purchases.
Jewellers are responding with sophisticated adaptations to counteract the demand dampening effect of the gold curb message. The strategic marketing shift is from category promotion to category trust.
The play is to shift from category promotion to category trust, lean on heritage, on long-term value, and on gold's role in Indian culture.
Product strategy innovations include lightweight and budget-friendly designs. The trend is shifting toward need-based purchases, with lightweight jewellery emerging as a preference, particularly among new-generation consumers opting for budget buys. Large organised players are increasingly focusing on premiumisation and studded jewellery categories that typically carry higher margins and reduce direct dependence on raw gold prices.
Exchange and recycling schemes are being enhanced. Almost 50% of business for some jewellers is driven through recycled gold. Exchange schemes allow consumers to optimise the value of their existing gold holdings while contributing toward reducing dependence on fresh gold imports. Innovative promotional offers include gold rate protection features, aggressive making charge discounts, and festive campaigns to drive purchases during auspicious periods.
Feedback loops between consumer sentiment, sales data, and appeal effectiveness are still evolving. Early indicators point to a bifurcated response that will likely continue to shift over the coming months. The advisory's initial impact has been psychological rather than transactional, but this psychological impact may translate into transactional changes over time as consumers internalise the message.
The true effectiveness of the PM's appeal will only become clear as these dynamics play out over the medium term. Cultural factors are likely to provide a floor beneath demand even as policy measures create headwinds. Analysts continue to expect healthy growth for organised jewellery companies in FY27, with 15% to 20% growth potential supported by stable demand trends and improving operational scale.
The jewellery sector is entering a transition phase defined not by a halt in demand, but by a reconfiguration of how that demand is met.
This structural shift, supported by IBJA's temple gold monetisation proposal and jewellers' adaptation strategies, may ultimately prove more sustainable than temporary demand suppression measures.
