Gold Demand May Slip to Decade Low in FY27
High import duty and record gold prices may push jewellery demand to a decade low in FY27 despite strong revenue growth for retailers.
MUMBAI, May 23 : India’s gold jewellery market is witnessing a major shift as soaring prices of the precious metal continue to reduce purchasing power among middle class consumers. Industry estimates suggest that gold demand decline in FY27 could reach its lowest level in nearly a decade, excluding the pandemic hit period.
According to a report released by ratings agency Crisil, gold jewellery sales volumes dropped nearly 8 per cent during FY26 and are expected to decline another 13-15 per cent this fiscal year. Demand is projected to remain between 620 and 640 tonnes, reflecting weak consumer buying sentiment amid rising prices and higher import duty.
The report analysed around 70 organised jewellery retailers, which together contribute nearly one-third of the sector’s total revenues.
The sharp increase in gold prices has made jewellery purchases increasingly difficult for average households. Gold is currently trading at nearly Rs 1,60,000 per 10 grams, forcing many consumers to postpone discretionary purchases and limit spending to essential buying such as weddings and traditional ceremonies.
Industry experts said the recent hike in import duty from 6 per cent to 15 per cent has further pushed retail prices upward. Since India relies heavily on imported gold to meet domestic demand, any increase in customs duty directly impacts consumer prices in the local market.
The government introduced the duty hike earlier this month to reduce non-essential imports and control foreign exchange outflows. However, jewellers believe the move may weaken demand in the short term, especially among entry level buyers.
Despite lower sales volumes, jewellery retailers are expected to post strong revenue growth due to higher realisations. Crisil estimates sector revenues may rise 20-25 per cent year-on-year in FY27 as higher prices increase the value of every sale.
Analysts noted that realisations, or the average revenue earned per unit sold, are likely to remain 35-40 per cent higher compared to last year. Consumers are therefore spending more money while purchasing smaller quantities of gold.
Leading jewellery retailer Titan Company also reported robust financial performance in its jewellery segment. The company’s jewellery business, which includes brands such as Tanishq, recorded a 48 per cent year on year growth to Rs 16,047 crore during the March quarter.
Titan stated that exchange-driven purchases played a major role in boosting sales. Many customers preferred exchanging old gold ornaments for new jewellery instead of making fresh purchases. The company noted that such exchange-led buying witnessed double-digit growth during the quarter.
Market observers believe the trend indicates a changing consumer approach, where buyers are focusing more on value preservation rather than luxury spending. As prices remain elevated, the gold demand decline in FY27 may continue to affect retail volumes even while overall revenues stay strong due to expensive gold rates.
