While India is known for its strong, nationwide affinity for gold, this is especially marked among the rural population, where jewellery ownership is considerably higher than it is in urban areas. Consumption patterns also differ between town and country. Jewellery is considered both an investment and an adornment in rural areas.
City dwellers tend to consider bars and coins as their preferred forms of investment. These differences take on a particular significance for gold demand as Indian cities and rural areas change and evolve. Additionally, it is to understand the Increasing urbanisation! India’s population has long been centred on rural communities, but this is in the throes of change.
In 1960, just 18% of the population lived in cities. By 2019, that had almost doubled to an estimated 34% and there is every expectation that such a trend will continue through the coming decades. Growing urbanisation has already contributed to a significant shift in employment patterns.
World Bank data shows that agriculture accounted for 63% of employment in 1991. By 2019, that percentage had shrunk to 43% and it is expected to continue falling sharply – to 25.7% by 2050. Agricultural income has traditionally been both relatively low and relatively volatile. A shift away from this sector should therefore drive incomes higher and, by extension, bolster demand for gold.
In recent times, new products such as sovereign gold bonds and digital gold products promoting micro savings have made an impact on savvy urban investors. The advent of bullion banking and exchange traded products may increase the variety of investment products and channels, which may offer potential opportunities for the industry to innovate.
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Shaping India’s $100 Billion Gems & Jewellery Future
At the Chintan Shivir on the 2040 Roadmap, Commerce Secretary Shri Rajesh Agrawal outlined a vision to grow India’s gems & jewellery sector from ~$29B to $100B, driven by innovation, technology, design, global branding.
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