The Indian jewellery industry is on a very strong growth trajectory. In the past 2-3 years the value of gold and diamonds has appreciated by 25-30% which has led Indians to spend more on gold and diamond jewellery aided by the robust growth in the economy
Mumbai: India’s vibrant and dynamic market has long been a testament to its remarkable resilience and growth, defying global economic fluctuations time and again. Amidst this backdrop, one sector that has consistently showcased unwavering strength is the Indian jewellery industry. Notably, the demand for diamond and gold jewellery in India has remained consistently robust, surpassing global trends and becoming an intrinsic part of the cultural fabric of the nation. The allure of precious metals and gemstones has captivated Indians for centuries, rejecting their rich traditions and cultural heritage. As we delve into the reasons behind Indians’ enduring inclination towards spending on diamond and gold jewellery, we unravel the intricate tapestry of factors that make 2023 an incredibly promising year for the jewellery industry in India.
Indian Market vs Global Market
The Indian market has exhibited a distinctive response in comparison to the global market, with several key factors contributing to this divergence. One primary factor is India’s cultural affinity towards jewellery, which has deep roots in the country’s history and traditions. Jewellery holds immense significance in Indian weddings, festivals, and other auspicious occasions, resulting in sustained demand that often outpaces global trends.
Additionally, India’s strong economic growth and a growing middle class have contributed to increased purchasing power and disposable income, enabling individuals to spend more on luxury items like diamond and gold jewellery. While the global market may experience temporary fluctuations due to economic downturns or changing consumer preferences, the Indian market’s demand for jewellery remains relatively stable, creating a favourable environment for the industry.
There are several reasons why Indians tend to spend more on diamond and gold jewellery compared to other countries:
Cultural Significance: Jewellery has deep cultural and emotional value in India. It is seen as a symbol of wealth, status, and blessings and is often passed down through generations. Indians attach sentimental value to jewellery, considering it an investment for the future.
Weddings and Festivals: Jewellery is an essential part of Indian weddings and is considered a significant expenditure. The importance of jewellery in weddings contributes significantly to the higher spending on diamond and gold jewellery in India. Festivals like Diwali and Dhanteras also witness a surge in jewellery purchases, as it is customary to buy gold during these festivals.
Investment and Financial Security: Gold has long been considered a safe investment option in India. The metal holds intrinsic value and is seen as a hedge against inflation and economic uncertainty. Indians view gold jewellery as a tangible and secure asset, leading to a preference for investing in it. The perception of jewellery as an investment and a means of financial security drives the preference for spending more on diamond and gold jewellery.
Status Symbol: In Indian society, wearing gold and diamond jewellery is often associated with prestige and social standing. The desire to display wealth and success drives the demand for these precious materials, particularly among the affluent.
Emotional Value and Sentimentality: Jewellery is not merely seen as an accessory in Indian culture, but as a cherished possession that carries emotional value. Families often pass down heirloom jewellery from one generation to another, making it a part of their legacy. The sentimental attachment to jewellery further enhances its worth and motivates Indians to spend more on acquiring and preserving these pieces.
The Road Ahead
Several factors indicate a positive outlook for the jewellery industry in India in 2023:
Economic Recovery: The global pandemic had a significant impact on India’s economy, leading to a period of economic uncertainty. However, as the country gradually recovers, there is optimism for increased consumer spending. With economic stability, people regain confidence and are more likely to invest in luxury items like diamonds and gold jewellery. As the economy improves, disposable income levels are expected to rise, increasing the demand for jewellery.
Growing Middle Class: India’s middle class is expanding rapidly, primarily driven by urbanization and rising incomes. This demographic segment has a higher propensity to spend on discretionary items, including jewellery. The growing middle class represents a substantial consumer base for the jewellery industry. Their increasing purchasing power and aspirations for a better lifestyle contribute to the industry’s growth.
Changing Consumer Preferences: The preferences of Indian consumers are evolving, and the jewellery industry is adapting to cater to these changes. Traditionally, Indian jewellery designs featured intricate craftsmanship and classic motifs. However, there is now a demand for fusion designs that blend traditional aesthetics with contemporary styles. Younger buyers, in particular, are attracted to modern and lightweight jewellery options. Jewellers are incorporating innovative designs and materials to appeal to a wider audience, expanding their market reach.
E-commerce and Digitalization: The rise of e-commerce and digitalization has transformed the retail landscape in India. With the increasing penetration of smart phones and internet connectivity, consumers now have easy access to a wide range of jewellery options online. This convenience has facilitated the growth of online jewellery sales. Jewellers are leveraging digital platforms to showcase their products, provide a seamless buying experience, and reach customers beyond geographical boundaries. The growth of e-commerce is expected to further fuel the demand for jewellery in 2023.
Government Initiatives: The Indian government has implemented several initiatives to support the jewellery industry. The introduction of the Goods and Services Tax (GST) has simplified taxation processes for jewellers, reducing the compliance burden. The GST has also eliminated multiple layers of taxation, making it easier for businesses to operate. Additionally, schemes like the Gold Monetization Scheme and Sovereign Gold Bond Scheme aim to mobilize idle gold and reduce the country’s dependence on gold imports. These government initiatives create a favourable environment for the industry’s growth.
Focus on Ethical Sourcing: Increasingly, consumers are becoming conscious of ethical and sustainable practices, and this trend extends to the jewellery industry. There is a growing demand for jewellery that is sourced responsibly, ensuring fair labour practices and minimal environmental impact. Indian jewellers are embracing transparency in their supply chains and adopting ethical sourcing practices. By offering ethically produced jewellery, they cater to the preferences of socially conscious consumers and contribute to the industry’s growth.
Global Recognition of Indian Designs: Indian jewellery designs have gained international acclaim for their exquisite craftsmanship and unique aesthetics. The intricate details, use of precious gemstones, and traditional techniques have attracted global attention. This recognition has opened up opportunities for Indian jewellers to expand their exports and cater to the global market. Increased export potential contributes to the industry’s growth and positions India as a prominent player in the global jewellery market.
In conclusion, the demand for diamond and gold jewellery in the Indian market remains robust, driven by cultural significance, weddings and festivals, and the perception of jewellery as a store of value and status symbol. In 2023, the jewellery industry in India is poised for growth due to factors such as economic recovery, the expanding middle class, changing consumer preferences, e-commerce and digitalization, government initiatives, and the focus on ethical sourcing. With these favourable conditions, the outlook for the jewellery industry in India is bright, presenting significant opportunities for jewellers and stakeholders in the market. However, it is crucial for businesses to adapt to the changing dynamics and leverage technology and innovation to stay ahead in this competitive landscape. By aligning with consumer preferences, embracing digital platforms, and adhering to ethical practices, jewellers can capitalize on the bright outlook and thrive in the evolving Indian jewellery market.
The article first appeared in IMAGES Retail Magazine June 2023 edition. The author is Snehal Choksey, Owner, Shobha Shringar Jewellery