Gold Jewellery Sales Volume to Plummet 13-15% in FY27, Reaching Decade-Low: Crisil Analysis

India's Organised Gold Jewellery Retail Sector Faces Steepest Demand Slowdown in a Decade

India's organised gold jewellery retail sector is facing its steepest demand slowdown in a decade, as soaring prices and higher import duty weigh heavily on consumer purchases. According to a report by Crisil Ratings, jewellery sales volumes are expected to decline 13-15 percent year-on-year this fiscal, taking overall demand down to 620-640 tonnes. This marks the lowest level in 10 years, excluding the pandemic-hit FY21.

The government's decision to more than double the customs duty on gold, from 6 percent to 15 percent, will be a significant deterrent to demand for gold jewellery. This move is aimed at curbing imports and reducing pressure on the trade deficit and the rupee. India imported 720 tonnes of gold in FY26, resulting in a foreign exchange outflow of nearly USD 72 billion. Domestic gold prices surged 55 percent last fiscal due to geopolitical uncertainties and rupee weakness against the US dollar, sharply impacting affordability.

Consumers are increasingly shifting towards lightweight and lower-carat jewellery in the 16-22 carat range, along with studded ornaments. Investment demand for gold has also gained momentum over the past two fiscals. While jewellery sales have fallen 25 percent, sales of gold bars and coins have risen more than 50 percent as investors increasingly view gold as a safe-haven asset.

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Despite weaker volumes, organised retailers are expected to post 20-25 percent revenue growth this fiscal due to higher realisations and elevated gold prices. Retailers may also offer deeper discounts to support sales momentum. Crisil said organised jewellers are continuing expansion through franchise-led models, especially in tier-II and tier-III cities, helping improve capital efficiency and market reach.

While overall debt will increase by a third this fiscal to maintain higher inventory levels for new and existing stores, credit profiles will remain stable, supported by improved revenues from higher realisations and healthy cash accruals. However, the report cautioned that volatility in gold prices, further changes in import duty, and shifts in consumer sentiment remain key risks for the sector.