Gold Jewellery Sales Volumes To Fall Nearly 15% In FY27, Sharpest Decline In 10 Years

India's organised jewellery retail sector is heading for its sharpest volume decline in a decade, with sales expected to fall 13-15% year-on-year in FY27, according to a Crisil Ratings report. The culprit is a combination of elevated gold prices and the government's recent decision to more than double customs duty on the metal from 6% to 15% — a move designed to curb imports and narrow the trade deficit.

Total sales volume across jewellery, coins and bars is projected to drop to 620-640 tonnes this fiscal year, a level unseen since the Covid-disrupted FY21. The sector had already contracted 8% in the previous fiscal, but the latest duty hike is expected to accelerate that trend considerably. In FY26, India imported 720 tonnes of gold, resulting in a foreign currency outflow of $72 billion — the backdrop against which the government moved to tighten import policy.

With domestic gold prices at around Rs 1,60,000 per 10 grams for 24-carat gold — up roughly 55% last fiscal on the back of geopolitical uncertainty and a weakening rupee — realisations are expected to be 35-40% higher on-year. That surge is enough to drive overall revenue growth of 20-25% for the sector even as volumes shrink, and Crisil expects absolute EBITDA to rise around 20% for gold jewellery retailers this fiscal.

Margins Under Pressure

Inventory holding costs are rising as gold prices stay elevated, with inventory days expected to stretch to 160-180 days from 150 days last fiscal. Retailers are also incurring higher promotional expenses and offering deeper discounts to nudge volume sales, while the growing share of gold bars and coins — which carry lower value-added margins — is weighing on gross margins. Overall sector debt is forecast to increase by roughly a third this fiscal to fund higher inventory requirements across new and existing stores.

Himank Sharma, Director at Crisil Ratings, noted that while investment-driven demand for bars and coins has picked up — surging over 50% across the past two fiscals as jewellery sales fell 25% — it is unlikely to fully compensate for the broader demand slowdown that the duty hike will bring.

Organised retailers are responding by expanding cautiously through franchise-led models, which improve capital efficiency and extend reach into Tier 2 and Tier 3 cities. Gaurav Arora, Associate Director at Crisil Ratings, said that despite higher debt levels, credit profiles across the sector should remain stable, underpinned by improved cash accruals and stronger realisations.