In this exclusive interview with Sachin Jain, Regional CEO, India, World Gold Council, Solitaire delves into soaring gold prices, the factors driving demand, the evolving preferences of Indian consumers, and the future of the industry.
How do you see the balance between gold purchases driven by tradition, like during Dhanteras and Diwali, and those driven purely by investment sentiment, especially amid rising prices?
We see a good balance between gold purchases during festive occasions like Dhanteras, Diwali and during price rises that are purely driven by investment sentiment. We have witnessed over 40 historic gold price highs this year, however it has also led to over 40% growth in investment demand in the first three quarters; from 118 tonnes investment gold demand last year to 163 tonnes in 2024.
You previously mentioned the positive impact of good monsoons and improved rural incomes. Could you elaborate on how rural gold demand trends differ from urban markets, particularly during festive and wedding seasons?
Good monsoons definitely have more positive impact as it puts money in the pocket of rural consumers, which does assist in gold demand. However, in comparison to urban markets, gold’s demand patterns in rural regions differ mainly from weight and design point of view. Rural consumers prefer more heavy weight, only gold, traditional designs in jewellery and urban consumers are increasingly leaning towards modern contemporary designs, studded and lighter everyday wear jewellery pieces. Urban consumers also are more aware of digital investment gold products like ETFs and digital gold in comparison to rural consumers, where awareness of investment gold products is comparatively lower.
Given the record-high gold prices, what strategies do you think are critical for ensuring continued consumer interest in gold beyond the festive and wedding seasons?
To keep consumers interested in gold beyond the festive and wedding seasons, some strategies are critical. First, retailers must come up with new designs for lighter jewellery to make gold products more accessible. Technology will be a big facilitator in improving the shopping experience, from virtual try-ons to personalised recommendations. The offering of digital gold and the promotion of gold ETFs can cater to investment-driven buyers. Tapping e-commerce and Q-commerce will further expand market access. Marketing efforts can be focused on the long-term investment value of gold. Rural markets with specifically tailored products and good monsoon-backed rural incomes will further boost demand, ensuring steady growth in gold purchases. Gold-backed loans and savings schemes with financial institutions are also likely to enhance the appeal of safe investment in gold. Educating consumers that gold is a hedge against inflation and economic uncertainty will reinforce its significance in diversified investment portfolios.
How are jewellery retailers leveraging lighter, daily-wear designs and cutting-edge manufacturing technology to ensure demand amidst the soaring price of the yellow metal?
Retail jewellers are sustaining the demand by creating innovative, lighter daily-wear designs using advanced manufacturing technology to make gold more accessible and affordable. Newer manufacturing techniques such as 3D printing and CAD also enable manufacturers to create complex, customised lightweight designs in gold. This process helps the retailers to save costs and attract consumers. Collaborations with high-end fashion designers and influencers will keep gold jewellery trendy and highly attractive. Combining tradition with modernity and innovation will ensure that gold jewellery remains in demand, and affordable, even at higher prices.
How does IIJS Signature contribute to the growth and development of the Indian gold industry?
IIJS Signature showcases cutting-edge trends and craftsmanship, encouraging jewellery manufacturers and artisans to innovate while setting benchmarks for quality and creativity. By attracting international buyers and exhibitors, the event amplifies export opportunities, positioning India as a global leader in the jewellery market. Additionally, it fosters networking and partnerships among jewellery designers, manufacturers and retailers, facilitating business growth and market expansion.
Investment in digital gold and emerging channels like e-commerce is growing. What future trends do you foresee in the digital gold space?
Digital gold holds great potential for growth with higher e-commerce adoption, penetration and tremendous growth in Q-commerce in India. We have seen during last Dhanteras how gold coins and bars were delivered within 10 mins, making buying, selling, and storing gold easier and more accessible to a larger population. Digital gold also has estimated 120 million consumers doing micro savings in gold using financial payment apps. Gold ETFs has also grown from AUM of around 40 tonnes in January to around 56 tonnes in November this year.
Moreover, the increasing popularity of gold ETFs and digital gold products will attract tech-savvy and younger investors to the market. Digital gold, given the changing consumer preferences for convenience and digital solutions, is expected to grow manifold and supported by innovative technologies. Growing participation of Fintech companies will also contribute to the development of new financial products and services that can enhance the customer experience. With AI and data analytics, investment insights and advice will be personalised to assist investors in making informed decisions. Overall, the digital gold segment will continue to evolve, offering more opportunities for investors and consumers alike.
What role can the government play in supporting the growth of the Indian gem and jewellery industry? Are there any specific policy measures that could help boost exports and domestic consumption?
The government is playing a crucial role in the growth and development of the Indian gold and jewellery industry through various policy measures. Couple of immediate policy recommendations would be:
Further reduction in taxes – One key measure was the reduction of 9% import duty on gold was in July 2024 budget. However, with 6% duty and 3% GST total taxes is around 9% which does provide some incentive for smuggling hence there is scope of reduction in overall taxes to be around 5%.
Regulation of Digital Gold – Encouraging digital transactions including e-commerce platforms will foster domestic consumption. With 120 million digital gold consumers this particular channel should be regulated to protect consumer interest.
A positive regulatory environment will further have booth exports and growth of domestic demand.