India’s organised jewellery retailers may be entering a slower growth phase after three years of aggressive store expansion, as higher import duties on gold and silver and tighter curbs on silver imports threaten to weaken demand and inflate operating costs in FY27.
Estimates by analysts at ICRA suggest that store count growth rate for jewellery retailers is likely to moderate to levels of about 12-15% in FY27 from about 24-25% per annum seen in the last three years. The blistering pace of growth over the last three years was led by a post-pandemic formalisation wave that benefited organised players.
According to consultancy CBRE, the share of jewellery in domestic retail leasing increased from levels of 5% in CY23 to 8% in CY25 as players capitalised on this. Gold prices, however, have more than doubled in the last three years, touching Rs 1,51,200 per 10 grams now, making jewellery purchases more expensive for consumers now amid global uncertainty.
Jewellers admit that discretionary purchases may be under strain given the current price volatility and curbs, prompting chains to adopt a more cautious approach to store expansion, particularly in smaller towns where demand tends to be highly price sensitive.
Shift Toward Gold Exchange
“Short-term consumer sentiment may see an impact as import duty hikes influence retail prices. Price-sensitive consumers may delay purchases, which could result in a volume decline of about 10-15% in the near term,” Suvankar Sen, CEO & MD, Senco Gold, said.
“There could be a short-term slowdown due to the policy announcements by the government, but we don’t expect demand to get destroyed,” Ashok Sonthalia, chief financial officer of Titan, the country’s largest jewellery retailer, said.
MP Ahammad, chairman at Malabar Group, sees consumers re-aligning their purchases, with exchange of old gold for new jewellery becoming a dominant mode of purchase. According to industry estimates, most organised jewellers today derive about half their jewellery sales from gold exchange programmes. This could accelerate to about 60-70% of sales in the near future.
Retail analysts say that higher import duties raise procurement costs for jewellers, while elevated bullion prices increase working capital requirements because retailers need to hold more expensive inventory. Silver retailers may face additional pressure as tighter import norms restrict supply and raise domestic prices.
Franchise Models
“Expansion plans are unlikely to stop, but retailers may become more selective,” said a Mumbai-based analyst tracking the gems and jewellery sector. “The focus could shift towards improving store productivity and protecting margins rather than adding outlets aggressively.”
Several retailers are also expected to lean more heavily on franchise-led expansion models to reduce capital expenditure and limit balance-sheet stress. Some may defer store launches or slow inventory additions until price volatility eases.
Silver jewellery and silverware, which gained popularity in recent years as consumers sought alternatives to gold, may also see demand moderation if import restrictions tighten availability.
Despite near-term headwinds, analysts remain constructive on the sector’s long-term outlook, citing continued formalisation, rising disposable incomes and growing consumer preference for branded jewellery. Organised retailers are still expected to gain market share from smaller unorganised players, although the pace of expansion may become more measured.
“Over the longer term, the jewellery sector is set to reinforce its status as a primary anchor for investment-grade real estate, spanning lab-grow diamond hubs, large-format showrooms in Tier-II cities, and premium retail destinations that combine traditional cultural demand with branded formats and tech-enabled consumer experiences,” Anshuman Magazine, chairman & CEO for India, South-East Asia, Middle East and Africa at CBRE, said.