India’s jewellery industry is preparing for a behavioural shift, not a demand collapse, after Prime Minister Narendra Modi’s appeal to citizens to cut down on gold purchases for a year.

Large organised jewellers say the immediate impact of the Prime Minister’s remarks could accelerate a transition already underway in the market: consumers increasingly exchanging old gold for new jewellery instead of making fresh bullion-heavy purchases.

“What we expect over the coming quarters is not a contraction in demand so much as a shift in how that demand is met,” said M.P. Ahammad, Chairman of Malabar Group. He expects exchange-led purchases to become the dominant buying trend as consumers turn more value-conscious amid elevated gold prices and policy messaging around reducing imports.

Executives say wedding and occasion-led jewellery demand remains relatively resilient, while investment-driven buying is likely to slow first.

“The investment-led segment is more vulnerable to messaging of this kind than jewellery is,” said Varghese Alukkas, Managing Director of Jos Alukkas. “Jewellery buying for occasions has historically been more resilient.”

Dr Joy Alukkas, Chairman and Managing Director of Joyalukkas Group, said Indian gold consumption remains deeply rooted in tradition, especially during weddings and festivals. “While public commentary may temporarily influence sentiment or purchasing timing, we do not expect it to materially alter overall buying behaviour during key consumption cycles,” he said. Consumers, he added, may become more value-conscious or shift towards lighter designs, but emotional and cultural demand for gold is expected to remain strong.

The comments come at a time when the industry is already battling record-high gold prices, tight margins and cautious consumer sentiment. While organised retailers say footfalls and wedding bookings have held steady so far, they admit the next few weeks will determine whether the Prime Minister’s appeal translates into a sustained behavioural shift.

Industry players also see a broader opportunity emerging around gold recycling and monetisation. India is estimated to hold nearly 25,000 tonnes of gold in households, much of it lying idle. “We believe recycling and monetisation are the more sustainable expression of the same national goal,” Ahammad said, referring to reducing dependence on imported gold.

Some jewellers, however, cautioned against relying on higher import duties to curb demand. Dr C Vinod Hayagriv, Managing Director of C. Krishniah Chetty Group, warned that raising customs duty could revive illegal imports and expand the parallel economy.

Instead, he suggested restricting bullion sales to GST-registered buyers to discourage speculative hoarding and reduce raw bullion imports.

Published on May 13, 2026