While this wedding season was expected to boost muted gold jewellery sales, the industry, on the contrary, reported a dip in business with prices of the yellow metal in domestic markets still ruling high despite a fall in international markets.
Thanks to the different measures taken by the central governments to curb gold imports and depreciating rupee, a 25% drop in gold prices in the international markets this wedding season has not been reflected in India in terms of a subsequent fall in prices of the metal.
Gold prices in India have not reduced due to high import duty, big premium being charged by MMTC and other gold importing authorities and rupee fall. Consequently jewellers are witnessing 15-20% drop in demands during the ongoing wedding season, All India Gems & Jewellery Trade Federation director Bachhraj Bamalwa told FE.
Demand dips with the people restricting themselves to buying only what are essential, Bamalwa pointed out. Joy Alukkas, chairman and MD of JoyAlukkas, one of Indias largest gold and jewellery retailers, echoed Bamalwa.
This wedding season jewellers across the country are witnessed not much of demands for gold jewellery compared to last season. Business is coming down by about 25%, said Alukkas.
He said designated importers such as MMTC were charging big premium in addition to the higher customs duty on gold imposed by the government, pushing up jewellery costs.
High jewellery costs are also pushing people to use less expensive 14-carat gold for diamond jewellery instead of using 18-carat gold.
Gems and Jewellery Export Promotion Council vice-chairman Pankaj Parekh said demands were picking up for 14-carat gold to be used in diamond studded jewellery as the metal was 16% cheaper than 18-carat gold. Gold jewellery retailers are now investing more on developing lightweight designs with lower prices in order to survive in the competitive market.
Retailers are spending much on new and trendy designs, which are actually lightweight but look a bit bigger, Bamalwa said.
Senco Jewellery Palace Abhusan chairman Anirban Sen said his firm was investing 80% more on innovative gold jewellery designs this wedding season compared to last season to attract customers.
We are investing more on designers for innovations, Sen told FE.