GST headwinds for gold jewellery sector but high price may impact demand

Cash sale and smuggled gold still in demand, industry consolidating favouring large chains

Imposition of the Goods & Service Tax has changed the way gold was traded in India. Prima facie, it has helped large gold chains to grow, the industry is consolidating and small jewellers have opted several other ways to retain customers and business. 

However, challenges still exist for jewellery industry as demand will be impacted due to high price, under pressure jewellers finances and rising cost. Hallmarking will lead to the churning of inventory.

The immediate impact of GST was felt with rising unofficial or smuggled gold import. According to GFMS, a metal research unit of Thomson