Gold jewellery consumption in India is set to grow by an estimated 14-18% year-on-year (YoY) in FY25, according to a report by ICRA. This follows an 18% growth in FY24, driven largely by higher realisations, despite muted volume growth.  

The report attributes the growth in FY25 to several factors, including the 900 basis point cut in import duty announced in the Union Budget of July 2024, which briefly lowered gold prices and spurred pre-buying of jewellery, bars, and coins. Additionally, improving consumer sentiment, festive demand, an increase in auspicious wedding dates, and favourable monsoons boosting rural income are expected to sustain growth in the second half of FY25.  

 Key Market Trends  

- Rising Gold Prices: Average gold prices in FY25 have increased by 25% compared to FY24, driven by global economic and geopolitical uncertainties and heightened investment demand.  
- Organised Retail Expansion: Organised jewellers are projected to grow their retail network by 16-18%, primarily through the franchise model, allowing for low capital expenditure and better local market access.  
- Shifting Consumer Preferences: The demand for branded jewellery continues to rise, especially in Tier II and Tier III cities, alongside the shift towards organised players due to reduced unofficial imports after the customs duty cut.  

Organised Sector Performance  

ICRA’s sample of 15 large retailers, accounting for approximately 75% of the organised market, is projected to witness a robust 18-20% revenue growth in FY25. Sujoy Saha, Vice President and Sector Head – Corporate Ratings at ICRA, noted that factors such as new store additions, rising gold prices, and higher demand in Q4 FY25 due to an increase in auspicious days will drive growth.  

However, operating margins for the organised sector are expected to moderate by 50-70 basis points (bps) from FY24 levels, primarily due to one-time losses from the customs duty cut and hedging-related expenses. Despite this, debt protection metrics are anticipated to remain strong, with interest cover improving to 6.2-6.4 times in FY25 from 6 times in FY24.  

ICRA expects margins to normalise by FY26 as the effects of the duty cut dissipate and retailers continue to focus on expanding their market presence.  

 Outlook  

The Indian gold jewellery market remains poised for steady growth in FY25, driven by strong consumer demand, higher gold prices, and the continued expansion of organised retail networks. The report underscores the resilience of the industry amid evolving market dynamics.