The Indian gold jewellery industry is anticipated to experience substantial revenue growth in the fiscal year 2025 (FY25), buoyed by recent developments in import duties and projected demand upticks. According to Icra, a leading credit rating agency, the sector is set to achieve revenue growth between 13 to 15 per cent in FY25, a significant increase from earlier projections of 6 to 8 per cent. This optimistic outlook follows a reduction in import duties on gold bars, which is expected to stimulate demand for physical gold and jewellery in the upcoming quarters.
In FY2024, gold prices surged by over 14 per cent annually, with a 20 per cent year-on-year increase noted in the first quarter of the current financial year. However, subsequent reductions in import duties have prompted a price correction, contributing to the sector’s recovery prospects, as reported by Icra. Since the duty cuts implemented on 23 July 2024, gold prices have moderated by approximately five per cent.
The recent reduction in import duties, announced during the FY2025 union budget presentation, saw tariffs on gold bars slashed from 15 per cent to six per cent. This revised structure includes a five per cent basic customs duty and a one per cent agriculture infrastructure development cess (AIDC), down from earlier rates of ten per cent and five per cent, respectively. The move is expected to curb unofficial imports and promote organized trade within the sector.
Despite significant price increases, the demand for gold jewellery has shown resilience, with volume growth of two per cent in FY2023 and four per cent in FY24. Icra highlights that favorable monsoon conditions forecasted in the coming months will likely bolster rural demand, which accounts for a substantial portion of gold jewellery consumption in India. Moreover, Icra forecasts that the return on capital employed (RoCE) will maintain around 20 per cent, underscoring the sector’s profitability outlook amidst evolving market dynamics.
In summary, the Indian gold jewellery industry is gearing up for robust expansion in FY2025, driven by favorable policy changes and anticipated demand recovery, particularly in rural markets.
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