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Informist, Thursday, Jan. 8, 2026

 

MUMBAI – Gold jewellery sector is expected to see improved volume growth in the second half of the current financial year ending March and value-driven growth is expected to materially boost overall revenue, leading to double-digit revenue growth for the full year, India Ratings and Research said in a report. This will offset the decline in volume during the first half of 2025-26 (Apr-Mar), it said. 

 

The rebound is likely to be driven by festival and wedding purchases, with increased demand and peak sales during the seasonally strong second half, it said. Additionally, the abolition of higher goods and services tax bands could boost discretionary spending on gold jewellery during festivities. 

 

The abolition of the 12% and 28% GST bands, effective Sept. 22 2025, bodes well for the retail jewellery sector, though the GST applicable on gold is unchanged. Under the GST reforms, most products in the 12% and 28?nds will move to the lower 5% and 18?nds, respectively. This will result in lower prices for consumers through price cuts, effectively improving household budgets for discretionary spending, such as on gold, during the festive season, underpinning the demand revival.

 

Despite the 50% on-year surge in gold prices in October 2025, these levels are viewed as the new normal, encouraging a steady demand improvement, according to the report.

 

The demand recovery will be led by non-deferral customer attitude, viewing elevated prices as the new normal, it said. The first signs of a demand trend reversal appeared when prices dropped about 6?ter Diwali in late October 2025, as buyers have remained cautious yet optimistic.

 

"While challenges such as higher old-gold exchange volumes and declines in lower-ticket segments persist, subduing the overall volume growth, the long-term structural growth fundamentals remain strong. Jewellers continue to expand, adding stores and maintaining a steady pipeline for new store additions, while adopting strategies to navigate price fluctuations and optimise inventory", Preeti Kumaran, senior analyst, Corporate Ratings, Ind-Ra said.

 

Gold prices have seen a secular rise, hitting new highs between January and September 2025, with a nearly 35% increase, and surging 50% on year by October 2025, the report said. With domestic gold prices exceeding INR 100,000 per 10g, domestic retail jewellery volume has remained under pressure, following the weak demand trends seen in the first half of the current financial year.

 

Domestic gold prices in India have closely mirrored international trends and a weaker rupee increased domestic price gains, India ratings and research said. It expects gold prices to sustain at this level in the near term, due to favourable retail and investment demand dynamics, and pick up in the third and fourth quater. "While a sustained near-term correction is unlikely, factors including de-escalation of global political tensions and rising interest rate scenario will result in some temporary moderation in gold prices," the credit rating agency said.

 

However, the agency observed that the domestic jewellery consumption has been subdued, with volumes falling 30% on year for the third quater of FY26. The lower ticket size, less than INR 100,000 segment volumes have been under pressure, as studded jewellery volumes have shown flat growth. The muted volume growth is also attributable to old gold exchanges, which account for 30%-45% of the total sales for jewellers, though this provides a natural hedge to safeguard margins, the report said.

 

Meanwhile, jewellers have enhanced their product mix by increasingly focusing on lightweight jewellery which is appealing for volume offtake, and on studded, silver, and MRP jewellery, which commands better gross margins.

 

In terms of inventory, given the elevated prices, jewellers reported slower inventory turns in FY25 and FY26 first half. Ind-Ra's sample set reported a slower inventory turnaround as of September 2025 than September 2024 and March 2025. The higher opening stocks, slack quarter for gold jewellery sales, and gold prices hitting new highs kept retail customers away, leading to jewellers sitting on high inventory levels during first half of FY26. Seasonal stocking for the earlier festive season also contributed to the elevated inventory levels as of September 2025, due to business expansion and new stores additions. However, inventory stocking could remain high at year-end, due to Akshaya Tritiya falling earlier in 2026 than the typical late-April to May.  End

 

Reported by Taniva Singha Roy

Edited by Deepshikha Bhardwaj

 

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