Demand Soars in Second Half of 2024

India’s jewelry market is experiencing a revival following recent reductions in customs duty on gold, paving the way for a significant increase in demand for gold jewelry in the second half of 2024. A new report from a brokerage firm predicts an 18% rise in gold jewelry demand from July to December, largely fueled by the upcoming festive season.

Shifting Trends in Gold Sales

The report highlights an intriguing trend in gold sales during the first half of the year. From January to March, there was a notable increase in sales of high-end jewelry, whereas from April to June, more affordable options gained popularity. This shift indicates changing consumer preferences amidst varying economic conditions.

Rural Markets Drive Growth

Experts note that rural and semi-urban markets are playing a crucial role in boosting jewelry sales. The increase in gold imports serves as a primary indicator of this growth. August alone saw gold imports double to a record $10.06 billion, up from $4.93 billion in August of the previous year, driven by the reduced customs duty and festive demand.

Customs Duty Impact on Import Trends

Despite this surge, the first four months of the 2024-25 fiscal year saw a decline in gold imports, dropping by 4.23% to $12.64 billion. The government’s decision to cut customs duty from 15% to 6% in the budget significantly impacted August’s import figures, although earlier months showed a decrease.

India’s Position in Global Gold Consumption

India ranks second in global gold consumption, trailing only China. The country’s gold imports primarily serve the jewelry industry, with Switzerland supplying around 40% of India’s gold, followed by the UAE at 16% and South Africa at 10%. Notably, gold constitutes over 5% of India’s total imports, contributing significantly to the nation’s growing trade deficit.

As the market evolves, the interplay of customs duty adjustments, festive demand, and changing consumer behavior will be key to the jewelry sector’s continued growth in the coming months.