Prime Minister Modi has called for postponement of gold purchases as austerity measures amid West Asia tensions, emphasizing that the Centre is trying to shield people from adverse impacts of the conflict. According to multiple reports, Modi's statement is viewed as a patriotic voluntary appeal rather than a policy ban or price cap. Prithviraj Kothari, managing director at RiddiSiddhi Bullions Ltd., advises existing gold investors that selling the yellow metal now would be a mistake, citing that RBI has been steadily accumulating gold, growing India's sovereign gold holdings from 794.64 metric tonnes in September 2025 to 880.52 metric tonnes by March 2026. The PM's words may nudge discretionary buyers toward lighter jewellery, digital gold, and ETFs - formats that don't trigger import demand, while India's 10-12 million annual weddings embed gold demand that is pre-committed and culturally non-negotiable.
Digital gold represents a unique investment vehicle that allows individuals to purchase, hold, and sell 24-karat physical gold digitally without taking immediate physical possession of the metal. According to reports from Mint, the gold purchased is backed by physical gold of equivalent value, which is stored by the service provider in secure vaults on behalf of the buyer. This form of investment is particularly suitable for first-time investors, small savers, and those who prefer online transactions over purchasing physical gold. For new gold investors, Kothari recommends shifting toward digital financial alternatives, which allow investors to benefit from gold prices without increasing physical imports or dollar outflows.
Unlike Gold ETFs and other market-linked assets, digital gold is not currently regulated by authorities such as the Securities and Exchange Board of India (SEBI) or the Reserve Bank of India (RBI). As reported by Mint, this means investors primarily depend on the credibility of the platform and its vault partners, as digital gold does not operate under a uniform regulatory framework governing disclosures, investor protection, or operational standards. The price of digital gold is displayed in real time and linked to domestic gold rates, which broadly track international spot gold prices along with applicable taxes, import duties, and platform margins.
Digital gold is taxed similarly to physical gold under capital gains tax rules, as reported by Mint. If digital gold is sold within 24 months from the date of purchase, gains are treated as Short-term capital gains (STCG) and added to the investor's total taxable income, taxed as per the applicable income tax slab rate. If the holding period exceeds 24 months, gains are classified as Long-term capital gains (LTCG) with tax levied at 12.5% without the benefit of indexation.
Multiple industry bodies have proposed alternative solutions to address India's gold import challenges. AIJGF national president Pankaj Arora has called for an overhaul of the country's gold mobilisation framework instead of deferring purchases, suggesting domestic gold mobilisation and recycling could be a better solution to foreign exchange problems. The industry warns that a sudden negative shift in consumer sentiment could reduce footfalls, slow manufacturing orders, and hit the incomes of small jewellers and artisans - the most vulnerable workers in the supply chain. Malabar Gold & Diamonds advocates for greater focus on recycling, exchange, reuse, and monetisation of existing domestic gold to reduce import dependency. IBJA proposes amending the Income Tax Act to allow borrowing and lending of commodities (gold), noting that India's current Account deficit (CAD) is linked to the Income Tax Act.
