New Delhi:

India’s jewellery retail sector has surged to $80 billion (Rs 666,480 crore) in the financial year 2024 from $50 billion in 2018, according to a report by Motilal Oswal Financial Services.

The report highlighted multiple drivers that led to the rapid growth of the industry, including rising disposable income, an improving mix for regular wear of jewellery, enhanced product offerings (design, diamonds, etc), trust-building through mandatory hallmarking by the government, and a better buying experience at organised retail outlets.

The organised retail jewellers accounted only for 36 to 38 per cent of the overall share in the retail segment; however, the majority of the retail jewellery market continued to be dominated by the unorganised/local players, comprising over 500,000 local goldsmiths and jewellers.

The report noted that the total gold consumption in India is 66 per cent for jewellery and the remaining 34 per cent for bars and coins. India’s gold supply is dominated by imports, and the country’s gold market experienced notable fluctuations in imports from FY18 to FY20.

The report stated that the country’s gold imports reached 980 tonnes in FY19 before declining to 720 tonnes in FY20. This volatility was led by various factors, including declines in global gold prices, buoyant economic conditions leading to heightened disposable incomes, and substantial demand for gold due to traditional celebrations and weddings.

However, in FY20, a significant drop occurred in gold imports due to escalating import duties and the initial stages of an economic slowdown.

The report mentioned Tamil Nadu, Maharashtra, Karnataka, West Bengal and Uttar Pradesh as the top five states for organised retail jewellery stores in India.

In India, weddings and festivals are the primary reasons for the purchase of jewellery. Bridal jewellery still accounts for a significant portion of demand, contributing 55 per cent to the total demand.

The daily wear jewellery accounts for 30-35 per cent of the Indian jewellery market. The industry is now strategically focusing on manufacturing lightweight pieces to cater to the preferences of younger consumers, especially those who desire daily wear gold jewellery that complements western-style attire.

Fashion jewellery, on the other hand, contributes nearly 10 per cent to the Indian jewellery market.

In the jewellery product segment, bangles and chains are the primary contributors to domestic jewellery consumption, accounting for 60-70 per cent of total sales. These are preferred as daily wear by women. Necklaces contribute around 15-20 per cent of the sales volume, with their sales surging during special occasions, such as festivals and weddings. The remaining 5-15 per cent of sales are attributed to rings and earrings.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

The World Gold Council expects India’s gold demand to rise in 2024 despite higher prices. File
| Photo Credit: Reuters

MUMBAI

India’s gold demand is expected to be subdued in the first quarter of 2024 due to lower jewellery sales, but annual demand is anticipated to rise as consumers adjust to higher prices, the World Gold Council (WGC) said on January 31.

Higher purchases in the world’s second-biggest gold consumer could support prices which are trading near record highs. However, the rising demand for imports could widen India’s trade deficit and put pressure on the rupee.

India’s gold demand has been stuck between 700 and 800 metric tons in the past five years, but it is expected to break out of this range and rise to between 800 and 900 tons in 2024, Somasundaram P.R., CEO of WGC’s Indian operations told Reuters. “Given the fact that high prices have now been absorbed and economic growth is robust, demand is resetting its base to 800 to 900 tons,” he said.

Indian gold demand fell 3% in 2023 from the prior year to 747.5 tons, the lowest since 2020, as prices rallying to a record high curtailed jewellery demand, the WGC said in a report published on Jan. 31. Switzerland, the United Arab Emirates, Peru, and Ghana are leading gold suppliers to India.

In the March quarter, demand is expected to stay low due to fewer auspicious wedding days, the WGC said. Weddings are a major driver of gold purchases in India, with the yellow metal in the form of jewellery being a crucial part of a bride’s attire and a popular gift from family and guests.

Indian gold consumption in the October-December quarter fell 4% to 266.2 tons, as a drop in jewellery demand overshadowed higher sales of coins and bars for investment purposes, the WGC said. Meanwhile, gold smuggling into India gained momentum to approximately around 130 tons from around 110 tons a year ago, Mr. Somasundaram said, due to prices reaching record highs.

The Commerce Ministry has backed a long-standing demand from the jewellery industry to reduce import tariffs on gold bars, Government and industry officials said, amid concern the duties were further harming the India’s faltering jewellery exports.