Layers of traditional kaasina saras or temple jewellery, ears drooping with the weight of jhumkis and their chains, brides’ plaits studded with jadebille and wrists clattering with bangles – any wedding, housewarming, naming ceremony or festival feels incomplete without gold. It’s not just a personal jewellery preference but rich with cultural meaning and is the shape that many families’ savings are moulded into. With this, when PM Narendra Modi requested Indians to put off purchasing gold for a year earlier this week and followed it with increasing import duty on gold to 15 per cent from 6 per cent on Wednesday morning, jewellers and customers were left to make alternative plans that were practical but still held cultural weight. Bride-to-be Niveda KS, an architect shares, “Initially, we had planned to get gold jewellery for both the engagement and wedding but with the increase in prices and the PM’s request, we decided to limit it to the engagement. Instead, we’re opting for imitation gold for the wedding. Some pieces in the trousseau though, like the thali and the wedding rings, will be gold. We’ve limited it to the most culturally significant pieces. As a family, we’ve also decided that if we purchase gold, it will only be as coins or biscuits because of low wastage and better resale value.”
However, not all customers have been so open to accomodate. “In conversations, consumers too are unhappy to curb their spending as jewellery consumers spend only as they need to. They are not hoarding jewellery,” says C Vinod Hayagriv, MD, C Krishnaiah Chetty Group. The duty hike, as he says, will hurt the jewellery industry and may not turn out as hoped. “Hiking customs duty will have an ill effect by reviving illegal imports. Instead, gold bullion (raw material for jewellery) could have been restricted to GST registered buyers,” he adds.
Varghese Alukkas, MD, Jos Alukkas agrees, adding that in the short two days between the PM’s address and concrete action being taken to discourage gold imports, the chain noticed mild panic buying. “Some people who were planning to buy gold in the next two weeks, especially those who had weddings coming up, decided to buy early. A lot of confusion also spread and we’ve been getting many inquiries about whether they should buy or sell their gold.”
Looking at the larger picture, gold prices have remained sky high since the war started and have ‘risen by 300 per cent in the last five years and by 80 per cent in the last year,’ as Alukkas put it. This has already started to affect who buys gold and how they do it. He adds, “Customers in the mid segment and lower-end segment have reduced their purchases. Overall, 50 per cent are exchanging their old gold jewellery for new jewellery because then, they only have to pay the making charges.” The new notification also offers some concessions meant to encourage jewellery recycling.
Jewellery buying trends too have partially started to shift away from gold, as Raj Diamonds’ MD, Eshwar Surana says, “Silver is growing among younger consumers because it is fashionable, versatile, and affordable. There is interest in lightweight diamonds, personalised jewellery, contemporary designs, and everyday collections that match their lifestyle.” Alukkas adds, “There is a hike in diamond jewellery purchases where the amount of gold used is less. With lightweight jewellery, pieces which used to come in 100 gm are now 50 gm because people are seeking good designs at lesser prices.”
While platinum may be another premium metal, it is simply not comparable to gold and has not seen any increased interest, Alukkas says, “Platinum is something only a few premium customers are interested in and worn at events like cocktail parties, It can’t take the place of gold.” With silver, Hayagriv cautions against seeing it as more than jewellery saying, “Silver is the most risky investment in history. I caution you to make careful systematic purchases over quarterly purchases to even out this risk.”
While a reduction in gold prices is not in sight anytime soon, Surana feels in the long run, gold’s deep roots in Indian culture will make sure the industry continues on. “Despite price rise, we are still seeing interest because gold continues to hold emotional value.”
