Diwali 2024 Expected to See Strong Demand for Gems and Jewellery in India
Team Finance Saathi
30/Oct/2024
What's covered under the Article:
- Indian jewellery market anticipates robust sales exceeding Rs. 30,000 crore for Diwali, with strong demand for gold and silver.
- Consumers shift towards gold as a reliable asset and silver as an affordable alternative with high returns.
- Calls for reduced import duties on gold to 9% amid rising prices and changing preferences, including a shift towards lab-grown diamonds.
The gems and jewellery industry in India is gearing up for robust sales during the Diwali season of 2024, with domestic sales projections surpassing US$ 3.57 billion (Rs. 30,000 crore), according to industry experts. The Dhanteras and Diwali demand for jewellery is expected to remain strong, driven by consumer perceptions of gold as a reliable asset amidst rising prices and silver’s increasing popularity due to its affordability and diverse industrial applications. As Diwali approaches, jewellery retailers across India anticipate a 10-15% year-on-year (YoY) growth in sales, although overall volumes may show a slight decline due to escalating costs in precious metals.
Gold and Silver: Popular Choices This Diwali
Consumers are increasingly viewing gold as a safe haven for investment, with the precious metal’s value seen as stable during periods of global uncertainty. According to Motilal Oswal Financial Services Ltd (MOFSL), gold has demonstrated a 23% return on investment this year, outperforming traditional market indices and reinforcing its position as a preferred asset. Silver, on the other hand, has emerged as the top performer in the precious metals category, delivering returns exceeding 40% YoY, making it a more accessible choice for customers who wish to invest in metals without the high costs associated with gold. This surge has outpaced stock market benchmarks, further elevating silver’s appeal.
Price Trends and Market Forecasts for Gold and Silver
Amid the anticipated sales boom, industry analysts have observed notable shifts in consumer behaviour and pricing patterns. Motilal Oswal’s forecasts predict silver prices could potentially exceed those of gold in the medium and long term. With price targets around US$ 1,487.62 (Rs. 1,25,000) for silver and approximately US$ 963.98 (Rs. 81,000) to US$ 1,023.48 (Rs. 86,000) for gold, these projections are influenced by several factors, including geopolitical tensions and global supply challenges.
Gold, being intrinsically tied to India’s festive and cultural fabric, remains a consistent choice for consumers. However, silver’s lower price point has been an attractive feature for those looking to invest in precious metals during Diwali. The increase in silver’s popularity is also due to its applications across sectors beyond jewellery, such as technology and medicine, reinforcing its value as a versatile and affordable option for Diwali shoppers.
Changing Preferences: Diamonds to Gold and Lab-Grown Diamonds
In 2024, the demand for natural diamonds has seen a shift, with many consumers gravitating towards gold. This change is largely attributed to the rising popularity of lab-grown diamonds, which offer a more affordable alternative and are increasingly perceived as ethical and sustainable choices. Lab-grown diamonds, similar in appearance to natural diamonds, have begun to appeal to younger consumers who value both cost efficiency and environmental consciousness.
The Eastern Regional Chairman of the Gems and Jewellery Export Promotion Council (GJEPC) noted that global uncertainties continue to drive demand for gold while silver’s affordability further enhances its attractiveness. The presence of lab-grown diamonds in the market has also impacted the demand for natural diamonds, prompting jewellers to adapt to this evolving trend and focus on marketing lab-grown varieties, especially among younger buyers.
Industry Calls for Reduced Gold Import Duties
As rising prices affect the gems and jewellery industry, industry representatives, including Ashok Bengani, President of the Ankurhati Gems and Jewellery Manufacturers Welfare Association, have urged the Finance Ministry to consider reducing gold import duties from 15% to 9%. This recommendation is seen as a strategic move to enhance market sustainability by making gold more accessible to domestic consumers. Lowering import duties would likely mitigate some of the impacts of price increases and could stimulate the jewellery market, particularly for gold, during high-demand festive seasons like Diwali.
The GJEPC has consistently highlighted the significance of import duty reductions to make gold jewellery more affordable and accessible to a wider audience. With lower duties, India could witness increased gold sales, as gold prices would become more competitive, encouraging more consumers to invest in jewellery during Diwali.
Growth Potential and Investment Opportunities in Precious Metals
Despite escalating costs, the Indian gems and jewellery market remains optimistic about Diwali sales, projecting a 10-20% increase in revenue. This optimism is driven by the steady demand for gold and silver, as well as evolving consumer preferences that are reshaping the jewellery landscape. Additionally, the consistent growth of lab-grown diamonds offers jewellers an opportunity to cater to a broader customer base with products that align with emerging trends in sustainable luxury.
The demand for silver and gold continues to be influenced by global economic and geopolitical factors, making them attractive options for investors seeking asset diversification. Industry experts expect silver to continue its upward trajectory, bolstered by industrial demand and constrained supply. The metal’s utility in diverse sectors, ranging from electronics to renewable energy, further enhances its value proposition as a multifunctional asset. Gold, however, remains a symbol of timeless value and financial security, especially in India, where it holds a deeply rooted cultural significance.
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Conclusion
The Diwali 2024 season brings renewed optimism for the gems and jewellery market, with robust demand for gold, silver, and lab-grown diamonds. As consumer preferences shift and the industry calls for policy adjustments like reduced import duties, India’s jewellery market is positioned for continued growth, further strengthened by the consistent demand for precious metals amid global uncertainties.
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The above article provides an in-depth look into the anticipated growth in jewellery sales during Diwali 2024, influenced by evolving consumer trends and financial strategies in the precious metals market.