Tariffs surge by 15% plus, and even Modi’s direct appeal for a halt fails to curb it! India’s gold demand remains robust

Due to the impact of oil price shocks exposing India’s energy dependence on the Gulf region, the country’s currency and foreign exchange reserves have come under significant pressure. To reduce imports and support the continually declining rupee exchange rate, the Indian government has tried to curb the gold buying frenzy.

In May this year, against the backdrop of conflict in Iran, Indian Prime Minister Modi publicly urged people to suspend gold purchases and more than doubled the gold import tariff to 15%. Earlier last week, Modi reiterated this demand, calling on Indian citizens not to buy gold unless “absolutely necessary.”

At the time, he also issued a rare appeal regarding this metal with deep cultural and religious significance: “Within a year, regardless of the event, we should not buy gold jewelry.”

However, the government’s appeal to limit gold purchases has clearly failed. Data from the World Gold Council shows that the vast consumer base continues to act as usual.

India accounts for about one-third of global demand for gold jewelry. Driven by religious festivals and the summer wedding season, in the quarter ending June this year, sales of gold jewelry in India surged by about one-third year-on-year, reaching $21 billion.

The World Gold Council noted in July that India’s major listed jewelers reported strong quarterly earnings, with revenue growth year-on-year ranging from 30% to 60%.

Titan Company, part of the Tata Group and the country’s largest jewelry retailer, saw its profits soar by 63% in the most recent quarter, with store traffic also rising accordingly. Currently, the jewelry business makes up the vast majority of the chain group’s profits.

Dual Role as Investment and Culture Stabilizes Demand

Ajoy Chawla, Managing Director of Titan Company, said in an interview that the impact of these measures is “not lasting,” and market demand is driven more by consumers’ price expectations.

“Their love for the product and for gold has always existed, and that will not disappear,” Chawla pointed out. “They see it as a way to store asset value. Even those who do not intend to sell their jewelry consider it part of their investment portfolio.”

Although more and more middle-class Indian families are increasing their investments in stocks and mutual funds, gold’s favored status as an investment tool remains undiminished.

Titan Company CFO Ashok Sonthalia remarked directly: “Even if I am a very financially savvy person, I would still invest in gold.”

In India’s massive and highly fragmented jewelry market, Titan Company occupies nearly a tenth of the market share. Since the beginning of this year, its share price has risen by nearly a quarter.

By contrast, during the same period, the blue-chip index Nifty 50—which includes this retailer—declined by nearly 9%. Nomura Securities analysts commented that, with strong consumer demand returning after last year’s stagnation, Titan Company is “in a very favorable position.”

In addition to its jewelry, watch, and eyewear businesses with nearly 3,700 stores worldwide, Titan has become one of the world’s largest watch manufacturers by sales volume.

To expand its business portfolio, Chawla revealed the company is seeking potential acquisition opportunities to diversify into new fashion and lifestyle segments, including handbags and perfumes.