New Delhi, May 22 (IANS). The income of the organized gold jewelery market may increase by 20-25 percent on an annual basis in this financial year (2026-27). However, due to the steps taken to reduce imports and higher prices, volumes may decline. This information was given in the report released on Friday.
Crisil’s report said that high gold prices will increase the cost of keeping jewelery stock and will also have to take more loans from banks. However, growth in both revenues and cash flows will balance the increasing dependence on debt, keeping the credit profile stable.
However, sales volumes in the organized gold jewelery retail sector are expected to decline further by 13-15 per cent this fiscal after 8 per cent decline last fiscal due to high gold prices and recent policy steps to reduce imports.
In FY 2026, India imported 720 tonnes of gold, draining the country of $72 billion of foreign exchange.
Amid persistently high gold prices, the central government has recently increased the customs duty on gold, as a measure to reduce the trade deficit and support the currency.
Its objective is to reduce the demand for gold and curb its imports. As a result, sales volumes in the sector are expected to be at their lowest in a decade, barring the COVID-19-affected FY2021, according to the report.
Himank Sharma, Director, CRISIL Ratings, said, “The decision by the Central Government to increase the customs duty on gold from 6 per cent to 15 per cent will have a significant negative impact on the demand for gold jewelery. Although there is a strong shift towards gold bars and coins due to investment demand, it is unlikely to fully compensate for the decline in overall demand.”
As a result, gold jewelery retail volumes will decline by 13-15 per cent year-on-year to 620-640 tonnes this fiscal, a figure not seen in the last decade, he said.
Although price increases will result in retailers gaining inventory, some of these gains may be passed on to customers to encourage bulk sales by offering greater discounts.
Additionally, increase in promotional expenses and trading of gold bars and coins will put pressure on retailers’ gross profits, the report said.
The report further said that it is important to keep an eye on the wide fluctuations in gold prices, further changes in regulations, possible government restrictions on gold purchases and changes in consumer sentiment.
–IANS
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