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Domestic Gold Industry Contributes 1.3% To Indian GDP
(14:39, 29 Sep 2022)

According to the World Gold Council (WGC), the gold industry is integral to the Indian economy, contributing 1.3% to Indian GDP. But it is still fragmented – dominated by small and medium-sized enterprises. Over the last decade, the retail jewellery market has undergone a notable shift, driven by changes in consumer behaviour and government regulations designed to encourage the industry to become more organised. The advent of chain stores in the last 10-15 years and their gradual gain of market share at the expense of stand-alone retailers has been notable. And this market share continues to increase up 5% since 2016 and representing a 35% share of the market by 2021. The competition fostered by such rapid expansion has encouraged innovation; jewellers are now focusing on product offerings that provide both value and diversity to India’s wide cultural and demographic customer base.

Securing bank finance is especially challenging for smaller independent jewellers who either tend to rely on the monthly gold scheme for funding or who act as money lenders, using that money for financing. One of the key factors preventing smaller jewellers’ access to capital is that most deal in cash and so do not report the full extent of their turnover in their accounts. Many have been unable to keep pace with the recent introduction of transparency measures and regulations and, as a result, their businesses have failed.

India’s manufacturing industry remains fragmented and unorganised. Only 15-20% of units operate as organised and large-scale facilities; this was less than 10% some five years ago. 55% of manufactured jewellery is handmade by karigars (artisans) who produce intricate pieces, thus sustaining the unique selling point for which Indian gold jewellery is renowned in the global market.8 While karigars form the backbone of the Indian gem and jewellery industry, many work in very poor conditions and a large number are underpaid as compared to many other industries, earning between Rs15,000-16,000 (US$190-200) per month.

The manufacturing sector is just at the beginning of the journey to become more organised. Jewellery parks – some of which have already been established – will help manufacturers in this process and address some of the growing concerns among retailers and consumers about ethical standards and working conditions for artisans. As many large players limit themselves to working only with organised manufacturers, market share of organised manufacturers will continue to strengthen.

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