Strong buying interest from jewellery retailers!

Import duty reduction in India, a catalyst for demand! 

Recently Kavita Chacko, Research Head, India- World Gold Council wrote about India’s gold market update: Import duty reduction, a catalyst for demand!

The significant cut in import duty on gold and the resultant decline in the landed cost of gold have been a shot in the arm for gold demand in the country. Anecdotal reports suggest that there has been strong buying interest from jewellery retailers as well as consumers since the duty reduction. 

At the recently concluded India International Jewellery Show, manufacturers noted that there has been a substantial increase in order bookings from retailers, who are preparing for the festive and wedding season running through December.  

In some cases, these orders have reached levels not seen in several years. Additionally, the trend of bar and coin buying remains strong, supported by consumers as well as jewellers who are capitalising on supportive gold prices to stock up for future manufacturing.  

Our analysis shows that in the past, when the import duty was raised in 2012, it created headwinds for jewellery demand but its effect was even more noticeable in the bar and coin market. Our econometric model suggests that Indian consumer demand – the sum of jewellery and bar and coin demand – could see an additional 50t or more in the second half of 2024. 

This is through a combination of an initial boost in consumer appetite given the more attractive price as well as a longer-term effect as local prices aligns more closely with the international price.