India is the world’s second largest consumer of gold jewellery. India purchased 611 tonnes of gold jewellery in 2021, second only to China (673 tonnes) but well ahead of all other gold consuming markets, according to the World Gold Council’s Jewellery Demand and Trade report released on 19 January 2023.
The report also highlights that India’s gold jewellery exports have grown from $7.6 billion in 2015 to $12.4 billion in 2019. However, bridal jewellery dominates the gold jewellery landscape, accounting for 50-55 per cent of the market share in India.
Plain gold jewellery accounts for 80-85 per cent of the market share, the majority of which is 22-carat gold, although the market for 18-carat gold jewellery is also growing. Daily wear jewellery accounts for 40-45 per cent of the market, the report added.
Somasundaram PR, Regional CEO, India, World Gold Council, says: “India is a strong pillar of support for the global gold markets as the second largest consumer of gold jewellery. While weddings and festivals are important drivers of jewellery demand, our rich cultural heritage and historical status as a major global trading power underpins this strong socio-economic relationship with gold.”
The WGC report also highlighted that rural India is the largest consumer of gold jewellery, accounting for 55-58 per cent of the market share, and that the middle class is the primary consumer of gold in India.
South India dominates Indian gold jewellery consumption, accounting for 40 per cent of the country’s total demand. Gold will account for 23 per cent of gems and jewellery exports in 2021, the report adds.
How is gold likely to perform?
Over the past few years, the Indian gold market has faced numerous changes, both in the regulatory environment and in consumer behaviour.
Gold jewellery demand faces further challenges, particularly from changing demographics, as the younger generation of consumers are tempted by other products, be it different styles of jewellery or luxury fashion accessories.
“However, despite all these factors, gold jewellery demand in India has remained resilient and is likely to benefit from strong economic growth and further urbanisation as per capita income rises and the number of middle-class consumers increases,” the report said.
The report also highlights the Indian government’s focus on strengthening manufacturing and exports, which is likely to increase in the coming years. Proposals to allow advance payments to overseas precious metal suppliers and the initiation of mega Common Facility Centres (CFCs) in SEEPZs in Mumbai and Surat could boost exports if implemented, the report added.
“In the long term, gold jewellery demand in India will be driven by economic growth, income growth and wealth distribution, and the rate of urbanisation,” added Somasundaram PR.
Importantly, the CFCs would provide common manufacturing processes and a common pool of high-end, capital-intensive, state-of-the-art machinery. This will benefit small manufacturers in particular, as they will have access to the latest technology and resources to improve quality and, in turn, export performance, the report adds.
