India is one of the largest consumers of physical gold, particularly in the form of jewellery, bars, and coins. Gold is seen as a safe investment that not only provides protection against inflation but also holds ornamental value. These dual benefits make it an essential part of most Indian households. Together, Indian families own around 25,000 tonnes of gold — making them the largest private holders of gold in the world.
This Akshay Tritiya, with gold prices touching new highs, let’s take a closer look at India’s gold jewellery market to understand whether it is better to buy gold or invest in jewellery companies.
Current State of India’s Gold Jewellery Industry
According to Deloitte, the jewellery industry is on a similar growth path, with the sector expected to expand from approximately US$80–85 billion in FY24 to an estimated US$225–245 billion by FY35.
As of FY24, around 62–64% of the Indian jewellery market — comprising over 5,00,000 local jewellers — remains unorganised, consisting mostly of small, local businesses. This presents a significant opportunity for growth as the industry gradually formalises.
Over the past five years, the share of the organised jewellery segment has grown from 20% to nearly 35%, and the momentum continues. Notably, many unorganised jewellers are transitioning to organised operations by adopting better business practices and technology.
India Overtakes China in Gold Jewellery Consumption
India and China dominate the global gold jewellery market, accounting for over half of global demand. While China had long held the top spot, India has now overtaken it, with jewellery consumption reaching 563.4 tonnes in 2024 — surpassing China’s 511.4 tonnes, according to CNBC TV18. This underlines India’s robust appetite and reaffirms its position as the world’s largest consumer of gold for jewellery.
India’s total gold demand rose by 5% year-on-year in 2024 to reach 802.8 tonnes, fuelled by higher jewellery purchases and increased investment demand amid rising gold prices.
Moreover, investment demand jumped from 185 tonnes in 2023 to 240 tonnes in 2024, indicating growing interest from retail buyers and investors. However, gold imports fell to 757.15 tonnes in FY25, down from 795.32 tonnes in FY24, suggesting a greater reliance on recycled gold and domestic sourcing.
Growth Drivers
Rising Female Workforce Participation: Female participation in India’s workforce has grown substantially — from 22% in 2017–18 to 40.3% in 2023–24. This shift reflects greater financial independence for women and expands the potential consumer base for gold jewellery.
Good Monsoon Boosts Purchasing Power: An above-average monsoon forecast is expected to boost rural incomes in 2025, potentially driving gold jewellery demand in rural areas — India’s largest jewellery market.
Evolving Consumer Preferences: Demand is widening beyond traditional segments. Jewellery is gaining popularity among men, becoming a preferred gift option during festivals and special occasions. Additionally, digital and e-commerce platforms are making jewellery purchases more convenient.
Cut in Import Duties: In the Union Budget 2024, announced on July 23, the government slashed gold import duties from 15% to 6%. This significant reduction led to a nationwide spike in demand post-announcement.
Rising Affluent Consumer Base: India’s middle class is projected to reach 1,250 million by 2048, while the wealthy population is expected to touch 310 million. This growing affluence is likely to fuel demand for both traditional and premium jewellery.
Challenges in the Indian Jewellery Industry
Gold Smuggling: With high import duties making gold expensive, smuggling has increased. An estimated 160 tonnes of gold are smuggled into India annually, compared to around 800 tonnes that are legally imported.
Gold Leasing Rate Surge: Leasing rates have jumped from 2–3% to 6–7%, raising operating costs for organised jewellers and putting pressure on their margins.
Elevated Gold Prices: According to The Economic Times, a 4% rise in gold prices during the first 15 days of March 2025 led to a 25% decline in retail sales and a 60% drop in bulk buying at Zaveri Bazaar. Consumers planning weddings are especially affected, opting for lighter or lower-carat jewellery to manage costs.
Stocks to Add to Your Watchlist
What’s Next?
According to Crisil Ratings, the surge in gold prices is likely to lower sales volumes for organised retailers by 9–11% in 2026. However, with significantly higher prices and realisations compared to the previous year, revenues are still projected to grow by 13–15%.
This price increase will impact retailers in two major ways: First, inventory gains of 20–30 basis points from the higher gold prices are expected to support operating margins, bringing them closer to the seven-year average of 7.8–8% by 2026. Second, the elevated cost of inventory is likely to increase debt. Still, improved revenues and profits should help retailers sustain their expansion plans.
While high prices have softened short-term demand — especially in traditionally strong markets like South India — festive buying sentiment during occasions like Akshay Tritiya may offer some support.
*The companies mentioned in the article are for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
