The organised gold jewellery retail sector, comprising jewellery, coins and bars, is expected to see sales volume decline further by 13-15 per cent this fiscal to 10-year-low. The jewellery sales were down 8 per cent last fiscal, due to high prices of gold and recent policy measures to curb imports of the metal.

Despite the expected decline in volume, the sector is poised to achieve a robust revenue growth of 20-25 per cent y-on-y, driven by higher realisations, as per Crisil Ratings report.

High gold prices will lead to increased inventory holding costs and higher bank borrowings. However, an increase in both revenues and cash accruals will offset higher reliance on debt, resulting in stable credit profiles, according to an analysis of 70 gold jewellery retailers.

In FY26, India imported 720 tonne of gold leading to foreign currency outflow of $72 billion. Amid sustained high gold prices and as a measure to reduce the trade deficit and support the currency, the central government recently raised customs duty on gold to suppress imports.

Though the uptick in realisations will yield inventory gains for retailers, some of these gains may be passed on to customers in the form of deeper discounts to incentivize volume sales.

Domestic gold prices soared an unprecedented 55 per cent last fiscal due to a rise in global gold prices amid geopolitical uncertainties, as well as a depreciating Indian rupee against the USD.

Investment demand has gained traction over the last two fiscals, with sales of jewellery plummeting 25 per cent and those of gold bars and coins surging over 50 per cent.

However, the persistently high gold prices and the recent hike in customs duty on gold are likely to dampen demand across various segments.

Himank Sharma, Director, Crisil Ratings said the central government’s decision to more than double the customs duty on gold to 15 per cent from 6 per cent will be a significant deterrent to demand for gold jewellery.

Volume of the gold jewellery retail sector will decline 13-15 per cent y-on-y to 620-640 tonne this fiscal, a level not seen in the past decade, he added.

However, at the current price of ₹1,60,000 per 10 gram (24 carat), realisations will be 35-40 per cent higher y-on-y this fiscal, thereby improving cash accruals.

Gold jewellery retailers are expected to see a 20 per cent increase in absolute Ebitda this fiscal. This will partly cover for the increase in inventory holding costs for retailers - as inventory days may rise to 160-180 days (from 150 days last fiscal) and also lend support to retailers’ expansion plans.

Published on May 22, 2026