India's gold jewellery market is adjusting to a new reality following the government's import duty hike, with consumers showing early signs of panic buying while the industry braces for a meaningful drop in volumes, according to Suvankar Sen, MD & CEO of Senco Gold & Diamonds.
Speaking to ET Now, Sen said customer behaviour over the past two to three days has been shaped by two distinct forces: wedding-driven urgency and fear of further price increases.
Wedding buyers moved first
Following the Prime Minister's appeal to citizens to limit gold purchases to essential needs, Sen said a segment of customers with weddings planned in the coming months grew anxious and rushed to buy jewellery sooner than planned.
"There was some amount of panic in their minds and they were not sure what to do," he said, noting that footfalls across Senco showrooms rose marginally as a result. A second group of customers came in simply fearing that prices would climb further once the government acted on duties, a concern that has now been confirmed.
Volumes could fall 10–15%
Sen was clear-eyed about the downside. With gold prices already elevated, and now set to rise further due to the duty hike, he expects consumers to shift toward lighter, lower-value jewellery to stay within budget — a pattern the industry has seen repeatedly over the past several years.
"There could be an overall impact of 10–12% to 15% in terms of reduction in volume," he said. The flipside, he added, is that old gold exchange rates — where consumers trade in existing jewellery while buying new pieces — are likely to climb. Exchange rates have already risen from 20–25% around a decade ago to 50–55% today, and Sen expects that trend to continue.
Senco sitting on 2.5 tonnes of inventory
On Senco's own position, Sen said the company is currently holding approximately 2.5 tonnes of gold across its showrooms, enough to cover four to five months of sales, effectively providing cover through the first half of the financial year.
With roughly 50% of that inventory hedged, the remaining unhedged stock has seen a notional increase in value following the duty hike. Sen acknowledged this provides a short-term pricing buffer, though the actual benefit will only be realised at the point of sale. Prices, he added, will likely rise from the current day itself as they are linked directly to market spot rates.
Lower karatage jewellery could protect margins
One potentially positive outcome from the duty hike, Sen argued, is a structural shift toward 18-karat, 14-karat, and even 9-karat jewellery — lighter, more affordable pieces that also tend to carry better margins for retailers than pure 22-karat gold.
"The moment it becomes lower karatage, it fits into the budget of the consumer and studded stones and diamonds get added to the jewellery, so that will help in the overall margin," he said.
Sen called for the industry and government to jointly promote lower-karatage jewellery as a consumer-friendly and foreign exchange-saving alternative, alongside a push to bring more old gold back into circulation through exchange programmes.
