India is the second largest gold jewellery consumer in the world. In 2021, India bought 611 tonnes of gold jewellery, second only to China (673 tonnes), but comfortably ahead of all other gold-consuming markets, according to the ‘Jewellery Demand and Trade’ report released by the World Gold Council on January 19, 2023.
The report further highlighted that gold jewellery exports in India have grown from US $7.6 billion in 2015 to US $12.4 billion in 2019. However, bridal jewellery dominates the gold jewellery landscape, enjoying 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. Jewellery used in daily wear 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 act as important drivers of jewellery demand, our rich cultural heritage and historic status as a major global force in world commerce underpins this strong socio-economic relationship with gold.”
The WGC report also highlighted that rural India is the largest consumer of gold jewellery occupying 55-58 per cent of the market share, and the middle class is the primary gold consumer in India.
Southern India dominates Indian gold jewellery consumption, accounting for 40 per cent of the country’s total demand. Gold accounted for 23 per cent of gem and jewellery exports in 2021, the report added.
How Gold Is Likely To Fare?
During the last few years, the Indian gold market has grappled with numerous changes, both in the regulatory environment as well as in terms of consumer behaviour.
Gold jewellery demand faces further challenges, particularly from changing demographics, as younger generation of consumers are tempted by other products, be that different styles of jewellery or luxury fashion accessories.
“Gold jewellery demand has, however, remained resilient in India despite all these factors, and it will likely benefit from strong economic growth and further urbanisation, as per capita income rises and the number of middle-class consumers increase,” the report said.
The report further highlighted that the Indian government has focused on strengthening manufacturing and exports, and this is likely to be enhanced in the coming years. Proposals to allow advance payments to overseas precious metal suppliers, and the initiation of mega common facility centres (CFC) in SEEPZ in Mumbai and Surat, could boost exports if implemented, the report added.
“Over the long term, gold jewellery demand in India will be driven by economic growth, income growth, and wealth distribution, as well as the rate of urbanisation,” Somasundaram PR added.
Importantly, the CFCs would provide common manufacturing processes and a common pool of high-end capital-intensive state-of-the-art machines. This will particularly benefit small manufacturers, as they will have access to the latest technology and resources to help enhance quality, and in turn, improve export performance, the report further said.
