India is the second largest gold consumer in the world. The country has emerged as a hub for gold refining and manufacturing, with majority of the gold refiners and manufacturers located in the country. According to a report of World Gold Council, economic reforms are further expected to drive the gold demand in 2018 and beyond.
Gold buyers have been waiting for the local gold prices to stabilize. So, the demand is expected to increase this year as the industry looks to revive from the disruption of cash ban and GST. These reforms had not only impacted the consumers, but the manufacturers as well. A number of small-scale jewellers were witnessing a major decrease in the sales.
However, experts at Rajesh Exports reckon that the organized jewellers have not been impacted to in a big way. According to them, the buyer preference is changing, and they are looking towards organized jewellers to purchase quality products, rather than buying low grade products from the unorganized jewellers.
In the Indian gold market every transaction is not recorded. Even the recorded transactions are not transparent. This is the main reason why the government launched reforms to change that trend and incorporate a better system, where transparency prevails. With a better system in place, there will be no place for the unorganized players, which will boost the sector and increase the demand from every corner. Even the companies like Rajesh Exports are expanding operations even as India’s Gold imports fall.
The long-term positive impact of new reforms will be visible when consumers will have more faith in the gold products that they are buying, and this in turn can support gold demand in the years to come.
Around 15 million weddings happen in India every year. Approximately 50 per cent of the Indian demand for gold is destined for weddings. It is ingrained in the culture, which is integral to not only weddings, but gifts of gold are common in anniversaries, birthdays and religious festivals. Gold jewellery is not merely meant for adornment by the Indian people. Rather, it is a store of wealth for them. But India’s love affair with gold has caused economic dislocations. As a result, so much disruption happened in the last couple of years.
But, all that will count for nothing, as both consumers and buyers get ready for the next stint, post GST and demonetization. Slowly but steadily, the Indian gold industry is finding its feet for a successful and profitable time ahead.