By
Bloomberg
Published
May 13, 2026
Prime Minister Narendra Modi’s push to curb fuel and gold consumption has added to uncertainty in India’s already weak stock markets, raising concerns that moves meant to protect the economy may end up cooling overall spending.
The government on Wednesday more than doubled import taxes on gold and silver, following Modi’s weekend call to cut non-essential imports and preserve foreign-exchange reserves. The NSE Nifty 50 Index has slid about 3% this week, as investors grow wary of further measures, such as higher fuel prices, alongside the impact of the Middle East conflict.
“The first salvo has been fired in the form of taxes on gold imports- there is probably more to come,” said Amit Goel, chief global strategist at Pace 360. He expects a hike in retail prices of gasoline if the Iran war drags on. “Markets have not taken the statements very well. Pessimism around geopolitics is back at extreme levels.”
Modi’s call to limit fuel and gold use, coming amid an energy shock from the Iran war, risks hurting a nascent recovery in consumer demand. The NSE Nifty India Consumption Index is up more than 8% so far this quarter, outpacing the broader market, but further belt-tightening may hit discretionary spending and weigh on growth.
JM Financial sees growth slowing to 6%-6.5% in fiscal year 2027, below the central bank’s estimate of 6.9%.
The measures have already rippled through stock markets, particularly among consumer-facing sectors. Jewellery shares have been under pressure since Modi’s call to curb gold demand, with Kalyan Jewellers India Ltd. falling 17% over three days and Titan Co. down nearly 10%.
The government’s emphasis on conserving foreign-exchange reserves comes as the rupee trades near record lows and foreign investors have pulled a record $22 billion from local shares so far this year. While the sentiment has turned very negative, Goel sees scope for that to stabilise. “The downside might not be very big from here as valuations have corrected,” he said.
