Daily wear/fashion jewellery accounts for 45-50% of the market. Unlike the bridal segment, which is primarily 22-carat, daily wear products cover 22-, 18- and 14-carat. Even so, 22-carat remains dominant with more than 80% of the market, and 18- and 14-carat combined account for a 15-17% share, with both having increased over the last decade.1 14-carat jewellery has only emerged in the last two or three years and, as it stands, only a small number of retailers currently offer this lightweight, relatively low-carat product.
The daily wear category covers a wide range of items, including earrings, rings, chains, mangalsutras, bangles and bracelets, ranging from 5g to 30g. 2 The growth in lower caratages has been driven by three factors: the growing popularity of modern designs; the increase in rupee gold prices, and the growth of studded diamond jewellery. Studded diamond jewellery is predominantly sold in lower caratages (14-carat and 18-carat) for two reasons: first, the studded diamond jewellery is purchased for adornment rather than investment; second, lower carat studded diamond jewellery is typically harder and so lends itself to stone-setting better than softer alloys. It is also easier to make thinner and more delicate designs in harder alloys, which again works better when the designer wants to set stones.
Gold-plated jewellery growth slowed after an initial euphoria
Gold-plated jewellery, or gram gold as it is known in India, is a phenomenon that has developed over the last decade, primarily driven by high gold prices. Essentially, it is jewellery with less than 1g of gold. This type of jewellery has resonated with lower-income consumers. Gram gold is available in bridal and daily wear collections.
Another recent phenomenon has been the introduction of gold-plated silver jewellery, which is becoming increasingly popular among fashion conscious consumers who frequently seek out new designs to match their attire (Focus 2).
Table 4: Wedding jewellery tastes by region
Source: Malabar Gold and Diamonds, Metals Focus, World Gold Council
Focus 2: Gold-plated silver jewellery gains traction
Gold’s usage in India for industrial purposes can be broadly divided into two categories – electronics and other industrial. The former covers the use of gold in electrical contacts and printed circuit boards (PCBs), while the latter includes plating and jari (gold thread).
Looking first at plating, over the last few years the tremendous growth in sales of gold-plated silver jewellery and articles, as well as imitation jewellery (gold-plated brass jewellery), has underpinned the increasing usage of gold potassium cyanide (GPC) in India.
However, not all of this has benefitted local GPC producers as most fabricators rely on imported material. For instance, in the first seven months of 2022 alone, India imported nearly 750kg of GPC, equivalent to 510kg of gold in fine-weight terms (gold accounts for 68.2% of GPC). To minimise costs, thrifting has emerged even in this segment, with the average thickness of gold coatings steadily declining. For instance, watches with a 5-micron (μm) plating thickness a decade ago are now using plating as thin as 0.1 μm.
The key barrier to local GPC production is the 15% import duty on gold bullion compared to that on gold compounds, which includes GPC at 11%. I believe that the government should work towards changing this inverted duty structure so that Indian producers can benefit from a level playing field.
Overall, the duty structure needs to be reviewed for industrial players to boost local industrial usage of gold. With the manufacturing of electronics and PCBs likely to rise and with the demand for plating also growing, there is a need to create a differential import duty structure for the industrial segment. In our view, this will help domestic fabricators, potentially opening up export markets and, in turn, help to cushion the negative impact of gold imports on India’s current account deficit.
Ketan Dhruv
Director, Bangalore Refinery
