Gold jewellery demand likely to rise by 10 per cent in 2015: ICRA

Mumbai: Jewellery demand in the domestic market is expected to rise by 10 per cent to USD 32 billion in 2015 on the back of improving consumer sentiments, says a report by ICRA. The demand has been stable since Q4 of CY13 and lower  prices, easing regulations and improving consumer sentiment are likely to provide impetus in the coming months, it said.   

The last quarter of CY2014 is likely to make up for  the initial demand slump and the aggregate demand for the year is estimated at USD 29 billion, the report added. Indian domestic gold jewellery in the retail segment had seen the demand at USD 31 billion in CY2013. India, amongst the two largest consumers globally along with China, would witness sustained growth owing to cultural affinity, demographic diversity, rising disposable  and preferred investment vehicle that are seen as the main growth drivers for the retail jewellery industry, it added. 

"It is interesting to note the rising share of organised players in the retail jewellery segment to 20 per cent from 11 per cent," the report said. The industry expects to record robust volume growth driven by improving industry sentiments amid easing regulatory norms and envisaged expansion plans by jewellers during the next 12 months, the ICRA report said.   

Volatility in the gold prices and prudent management of financial profile given incremental expansion plans are  also seen as the immediate challenges for the industry. Further, it said, the import volume is expected to remain firm, with 20:80 scheme being withdrawn, and help meet  bulk of the requirements by substituting a portion of illegal imports and recycled volumes.   

Gradual easing of restrictions aided by RBI's notification in May 2014 allowing premier or star trading    houses to import bullion under the 20:80 rule has helped    imports a stage smart recovery, it pointed out. ICRA said the Industry expects gold prices to remain largely range bound around current levels, owing to a strong US dollar, weak crude prices and related low inflation expectations limiting price increases.   

However, the expected improvement in physical demand from China and India may pull the domestic prices higher, reflecting their expectations of the domestic currency