MUMBAI (Commodity Online): Has the consumer behaviour towards spending money for buying gold and silver changed thanks to the surge in bullion prices in the last few months? Yes, consumer preferences for buying gold and jewellery items have drastifally changed thanks to the bullion price spike, says a study by Exim Bank, a government owned bank in India.
According to the study by Exim Bank, increasing domestic demand, along with an anticipated pick-up in exports, is likely to drive growth of Indian jewellery market in the long term. Besides, growth in other economies like the West Asia, Hong Kong and China could help the sector regain its glitter.
The study has found that demand for gems and jewellery is income elastic, and is likely to remain moderate in the near future. Changing lifestyle and urbanisation are also expected to stimulate sales growth in gems and jewellery, mainly in the branded segment.
Consumer awareness generated through the vigilant measures adopted by various governments are expected to drive the demand for branded and hallmarked jewellery.
The study said the spike in gold and silver prices might change consumer preferences, as also impact their demand pattern. Growing consumer sophistication, decline in investment-driven jewellery demand and competitions from other luxury goods are also likely to impact the demand pattern of gems and jewellery.
A major advantage of Indian gems and jewellery industry is the low cost of labour -- the country has skilled manpower to design and make high volumes of exquisite jewellery at relatively low labor cost.
The Exim Bank study has highlighted that Indian gems and jewellery industry has been increasingly building its ability to produce full range of sizes and qualities of stones, utilising not only the low-cost and abundant workforce, but also advanced technologies.
Both the government and the gems and jewellery industry have recognised the use of IT in diamond clusters in order to enable seamless flow of information between the functional areas, right from job contractors to small/mid-sized firms, to large, integrated units.
The study said that that while several measures have been taken at the industry and government levels, there is still a need to strengthen the position of India in the global marketplace through a concerted strategy, addressing the challenges of raw-material sourcing, technological infusion at the processing stage, adoption of dynamism in design and product development and sustainable market entry approaches.