Gold jewellery demand is experiencing its most severe downturn in a decade, with volume expected to fall 13-15% in FY 27 according to CRISIL reports. The sector's sales volume may decline to 620-640 tonnes in FY 27, marking a 10-year low as retail buyers increasingly shift to cost-management strategies. India imported approximately 720 tonnes of gold in FY 26, resulting in a massive foreign currency outflow of $72 billion. As reported by CRISIL, this represents the sector's lowest sales volume level in a decade, excluding the Covid-impacted fiscal 2021. The volume for gold jewellery buyers dropped nearly 6%-7% in FY 26 and is likely to fall further to 13-14% in FY 27, highlighting the sustained impact of elevated gold prices on consumer purchasing behavior.
Gold prices have experienced a dramatic surge of nearly 60% in 2025, with the rally continuing into 2026. To address the currency pressure, the central government has increased import duty on gold and silver to curb gold imports and support the weakening Indian Rupee. According to CRISIL analysis, this price surge has forced buyers to adopt cost-management strategies, including shifting towards lightweight designs, lower-carat jewellery (16-22 carat range), and studded ornaments to manage rising costs. While sales volume may decline significantly, the sector is projected to achieve robust revenue growth of 20-25% annually due to higher realisations from elevated gold prices. However, as reported by CRISIL, a significant fall in gold prices appears unlikely in the near term, maintaining the pressure on consumer purchasing decisions.
The sector faces increased operational challenges as high gold prices lead to increased inventory holding costs and higher bank borrowings. However, as reported by CRISIL, an increase in both revenues and cash accruals will offset higher reliance on debt, resulting in stable credit profiles for gold jewellery manufacturers. The combination of volume decline and price surge creates a complex market dynamic where overall sales value could still rise despite reduced purchasing volumes, though this represents a fundamental shift from previous years of consistent demand growth. Buyers are increasingly shifting towards cost-management strategies, which could reduce overall purchase bills for many consumers even as gold prices remain elevated, though this trend is expected to continue in the ongoing financial year.
