The gems and jewellery industry plays an important part in
the Indian economy. In addition to boasting a large gems and jewellery market,
India has a unique situation in terms of both demand and supply. The domestic
gems and jewellery industry had a market size of INR 251,000 Cr in 2013, with a
potential to grow to INR 500,000–530,000 Cr by 2018.
The demand in India can be segmented into consumption and
investment. Unlike most other countries, investment demand for gold is
important in India and accounts for about 45 percent of total market demand.
Around 57 percent of the investment demand comes from bars and coins, while the
rest comes from jewellery. The high investment demand is driven by a lack of alternative
financial institutions for a large section of society, a perceived capacity to
hedge against inflation, ability to invest smaller value in gold, high returns
in gold over the past 12 years and ease of investing unaccounted money in gold.
Also, while the volume demand for gold as jewellery has remained more or less
constant over 2005 to 2013, the volume demand for gold bars and coins have
grown at a CAGR of around 13 percent in the same period.
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