Gold jewellery consumption in India to grow at 11% in FY23: ICRA

India’s gold jewellery demand is likely to grow steadily at 11 per cent during the current financial year due to strong retail performance last year, according to a report by ICRA Ratings.

Within the jewellery retail industry, revenues of organised retailers are likely to grow at a higher pace of 14 per cent, backed by their aggressive store expansion plans and a gradual shift from the unorganised segment towards the organised one, ICRA said.

“Demand during the current Akshaya Tritiya season is expected to be strong, leading to a healthy demand growth of around 45 per cent Y-o-Y in the first quarter of FY23. Growth for FY23 is expected at 11 per cent for the industry, despite a high base witnessed in FY22, driven by the anticipated steady wedding and festive purchases during the current fiscal, given Indian consumer’s strong cultural affinity towards gold,” ICRA Senior Vice President and Group Head Jayanta Roy said.

Interestingly, at the forecasted level, gold jewellery demand in FY23 would be almost 40 per cent higher than the levels seen in FY20, he added. The ICRA report further stated that the jewellery retail sector is estimated to have grown at a robust 26 per cent in FY22, driven by the strong demand recovery witnessed post the second wave of COVID-19 in the first quarter of 2021-22.

This was despite a sharp increase in gold prices, which resulted in some postponement of purchases for weddings and other occasions towards the end of the fiscal, the report observed.

Consumption in FY22 was spurred by a pent-up demand in the second quarter and healthy festive and wedding demand driving record sales in the third quarter. Further, gold jewellery demand in the fourth quarter too was better than expected, with a limited impact of the third wave on store operations. For FY23, revenues are expected to grow at a steady pace of 14 per cent driven primarily by anticipated store expansions, it said.

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