Gold has always been India’s favorite metal, perceived as a safe haven for investment; and the trend continues despite the pandemic. No doubt gold jewelry sales have been negligible during lockdown, but post unlock, consumer demand is rising albeit slowly.
While consumer sentiment is positive for gold, rising gold prices have increased the entry barriers. Suvankar Sen, Executive Director, Senco Gold & Diamonds, however, feels that is not a cause of concern:
“We are seeing two types of consumers – first, customers who are buying jewelry for family functions and weddings and second, customers who are selling their gold to us. The first set is more dominant and buying more than usual. With gold price rising by 35-40% in the past year, customers are bullish and happy to buy products seeing the increase in return value.”
The view was ardently supported by Prithviraj Kothari, National President, India Bullion and Jewellers Association (IBJA), who opined:
“In India the price of gold is secondary. People follow trends and are habituated to buy gold despite rising prices.”
He further added that major movement in gold investment has taken place in a different segment. Government-issued Sovereign Gold Bonds in April, May, and June. In these three issues, investors bought almost 6.3 Tons of gold by paying Rs. 3900 crores. Volatility in the global indices forced the investors to give gold a prominent place their portfolio.
The slowdown in the Indian economy can potentially create a huge liquidity problem. Hence people would be inclined to buy gold in bars and coins that can be easily converted cash. Demand for silver is also expected to rise in the near future while gold jewelry buying will peak only in weddings and festive seasons.
Somasundaram PR, Managing Director – India, World Gold Council pointed out the drawbacks of the industry. In his opinion, Indian gold jewelry industry must learn from countries like Turkey and Thailand, who have embraced innovation whole-heartedly. He urged the industry:
“At this stage we have to show true value addition – much better than what we have done. Our innovation has been restricted to new designs. That is the most basic level of innovation. What we need to do is address consumer needs. Efforts should to be made to rope in experts and conduct studies that elucidates the product value and need.”
Resonating the same sentiments, Suvankar Sen highlighted the need to portray “India as the Jewelers to the World” by enhancing the industry’s branding and promotions in the world market. In his opinion, coordination and collaboration is key to drive innovation in the industry. Further, he added that this is the right time for Indian jewelers to create an international niche in the fashion and costume jewelry market.
In conclusion, it can be said that the verdict is in favor of gold and the industry. Efforts made by the industry are visible and being applauded. If the sector leaders can play it well, we could very well have an ultra-modern industry without any loss of jobs, very soon.
The above views have been excerpted from the panel discussion “Overview of Industry – Gold & Silver Markets” at ET BJwelled.