The organized gold jewellery retail sector, encompassing jewellery, coins, and bars, is projected to experience a sales volume decline of 13-15% this fiscal year, marking a 10-year low. In the previous fiscal year, jewellery sales declined by 8% due to soaring gold prices and recent government policy measures aimed at curbing imports of the metal.
Despite the anticipated decrease in volume, the sector is expected to achieve robust revenue growth of 20-25% year-on-year, attributed to higher sales realizations, according to a report by Crisil Ratings. Though high gold prices will increase inventory holding costs and necessitate greater bank borrowings, the expected rise in revenues and cash accruals is anticipated to offset the dependence on debt, leading to stable credit profiles among 70 analyzed gold jewellery retailers.
In FY26, India imported 720 tonnes of gold, resulting in a foreign currency outflow of $72 billion. In response to sustained high gold prices and to mitigate the trade deficit, the central government recently increased customs duty on gold in an effort to limit imports.
While the upward trend in prices may offer inventory gains for retailers, some of these benefits may be passed on to consumers through deeper discounts designed to stimulate volume sales. Domestic gold prices surged by an extraordinary 55% last fiscal due to increases in global gold prices, geopolitical uncertainties, and a depreciating Indian rupee against the USD.
Investment demand for gold has shown notable growth over the past two fiscal years, with jewellery sales dropping by 25% while sales of gold bars and coins have increased by over 50%. However, the persistently high gold prices and the customs duty hike are likely to suppress demand across various market segments.
Himank Sharma, Director at Crisil Ratings, noted that the central government’s decision to raise customs duty on gold from 6% to 15% will significantly deter demand for gold jewellery. The volume within the gold jewellery retail sector is expected to decline to between 620 and 640 tonnes this fiscal year, a level not reached in the last decade.
At the current price of ₹1,60,000 per 10 grams (24 carat), realizations are projected to be 35-40% higher year-on-year this fiscal, thereby improving cash flow for retailers. Gold jewellery retailers are expected to see a 20% increase in absolute EBITDA this fiscal year, which will help mitigate the rise in inventory holding costs, as inventory days are likely to extend to 160-180 days from 150 days in the previous fiscal year, additionally supporting retailers’ expansion efforts.
Published on May 22, 2026.
