The gold industry forms an integral part of the Indian economy, reflecting its significance as a key source of employment and foreign exchange (Forex) earnings. The sector benefits from a large and vibrant market driven by strong domestic consumption and exports dominated by the Indian diaspora.
India’s gold industry contributed 1.3% to Indian GDP and is dominated by small and medium enterprises. The domestic market is underpinned by culture, wedding and festive demand, which we will explore in more detail in an upcoming report.
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.
Perhaps a significant contribution to India’s economy, India’s gold industry face a challenge! 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.
