India’s jewellery demand to rise to 670-685 tonnes in 2016: Ind-Ra

A report by the Ratings and Research (Ind-Ra) anticipates the domestic jewellery demand in India in 2016 to remain robust with a 3-5 percent growth to 670-685 tonnes, reports say. This increase would occur despite the volatile gold prices, according to the agency, reports add. The agency noted that the said demand in 2010-2015 stood steady at 600-670 tonnes inspite of the despite gold price volatility on the back of wedding related purchases.

The outlook for jewellers is stable, with retailers expected to fair well following a sustainable domestic demand, shifting preference towards branded jewellery and fading regulatory headwinds, Ind-Ra notes.

Demand for coins and bars is also expected to increase as consumers look out for gold as a wealth protection route amidst global economic and political instability and weakening domestic currency.

The short term demand may be slightly affected owing to the increase in excise duty by the government in the Union Budget.

The agency did not give a very positive outlook for exporters, as it depicted a negative outlook moving from stable. This it noted is due to the low Chinese diamond jewellery demand, as a result, the cut and polished diamond exports will be strained despite the growth in diamond jewellery demand in the US. The agency also noted a drop of another 5-10 percent in rough diamond prices prompted by the diamond producers.