Jewellers had seen a revival of fortune in the Akshaya Tritiya in 2017, after two successive years of subdued growth in sales on this day.
The government has stepped up efforts to lure people away from the physical metal by inviting applications for sovereign gold bonds, but the ritual of gold buying on the auspicious occasion of Akshaya Tritiya is unlikely to be affected on Wednesday.
In fact, with the initial disruption due to the rollout of the Goods and Services Tax and residual impact of the note ban behind them, jewellers see a spike in sales. Jewellers had seen a revival of fortune in the Akshaya Tritiya in 2017, after two successive years of subdued growth in sales on this day. Major jewellers, including Malabar Gold and Diamonds and Anmol Jewellers, told FE that they expect an even better Akshaya Tritiya this time, with some of them projecting a 20-30% jump in their sales from the same day last year. The build-up to the Akshaya Tritiya has also witnessed good sales, they said.
An over 7% rise in prices since last Akshaya Tritiya is seen mostly positive in urban areas where customers are willing to bet on gold, assuming prices could go up even further. Although high prices at times limit the purchase volume in rural areas — where most of the small-time jewellers operate — jewellers see a moderate rise in sales so far. The prospect of a good harvest due to a normal monsoon this year and higher economic growth will likely drive up demand for gold sales this year, said analysts. However, as seen in recent years, larger players could see their sales rise at a faster pace than the smaller ones. As such, the small jewellers are struggling to attract customers as the government has, in recent years, introduced various curbs — including mandatory quoting of PAN beyond purchases of a certain limit and limited transaction in cash.
Jewellers, in ways large and small, have resorted to offering discounts to woo customers on the auspicious day.
Ahammed MP, chairman of Malabar Gold & Diamonds, said his company remains bullish about sales this year, too. “More importantly, this (Akshaya Tritiya) coincides with the wedding season, which is another prime trigger for gold sales in India. And over and above, the industry has come back to its normalcy after the hiccups like demonetisation and GST and there are a number of positive triggers.” Ishu Datwani, founder of Anmol Jewellers, expected 25-30% rise in his sales. “We are expecting good sales this Akshaya Tritiya, especially for classic diamond jewellery and gold temple jewellery,” he said.
Vaibhav Saraf, director at Aisshpra Gems and Jewels, said his company witnessed good sales in March as well and predicted a 20% rise in sales on the day of the Akshaya Tritiya. “Even as the overall market sentiment is positive, gold prices are likely to put marginal effect on consumer demand for heavy jewellery,” he said. Tanya Rastogi, director at Lala Jugal Kishore Jewellers, said due to the Nirav Modi scandal, “we have seen a shift in trend where consumers have started opting for gold over diamonds as they are sceptical”. After a drop in 2016, India’s gold demand rebounded last year with a 9% rise to 727 tonne when global consumption hit an eight-year low, showed the data released by the World Gold Council (WGC). However, domestic demand still trailed a ten-year average of 840 tonne.
WGC managing director (India) Somasundaram PR has said that demand in India would remain in the range of 700-800 tonne in 2018, based on a conservative estimate. All signs — expectation of higher economic growth, stabilisation of the Goods and Services Tax (GST) regime, rural push in the Budget and the fall in the stock markets from their peaks — suggest a good year ahead for the precious metal. Net gold imports grew 59% to 888 tonne in 2017, against 558 tonne a year before. The government has announced that it would accept applications up to April 20 for the issuance of sovereign gold bonds, with a 2.5% anuual interest. It is part of the government’s efforts to garner as much as Rs 5,000 crore from all the three gold schemes this fiscal — the same as 2017-18 (revised estimate).
The sovereign gold bond, gold monetisation scheme and Indian gold coin were launched by Prime Minister Narendra Modi in late 2015, as the government wanted to discourage imports of the precious metal and curb their damaging impact on trade balance. However, the gold schemes are still far from a success though, as the annual mop-ups are barely 2-3% of the country’s annual consumption.