India jewellery industry up 60% from pre-Covid level in Q2FY23: Icra

On a year-on-year (YoY) basis, the demand for jewellery in India contracted 2 per cent

India’s jewellery industry grew 60 per cent in the second quarter of this financial year (Q2 FY23), compared to the same time in FY20, the year when the coronavirus struck the country.

On a year-on-year (YoY) basis, demand contracted 2 per cent, according to rating agency Icra. The contraction was attributed to high base as demand for jewellery in India rose 70 per cent in Q2FY22. Demand soared after the lifting of pandemic-induced restrictions.

As compared to FY20, the demand for jewellery was up over 35 per cent in FY23.  

"While the jewellery sector has recorded healthy sales in the Dussehra and Diwali seasons, factors like high domestic inflation, cautious consumer sentiments towards discretionary spending and weak rural economic recovery due to erratic monsoons are likely to continue to constrain demand growth in the near term. Nevertheless, the demand outlook for the sector in the medium to long term remains favourable," said Kaushik Das, vice president and co-group head at Icra.

In Q3FY23, the industry might contract by 10 per cent. This is less than its earlier prediction of a 15 per cent contraction on the back of steady demand and the upcoming wedding season.

In Q4FY23, the growth in the jewellery industry is expected to remain flat owing to the inflationary pressures, front loading of wedding purchases in Q3 and seasonal variation in demand.

For organised players in the sector, this could mean revenue growth of about 20 per cent in FY23.

"With the healthy jewellery demand witnessed in the recent past, organised players had re-initiated their expansion plans in FY2022, which is expected to gain momentum in the coming quarters...Consequently, growth of the organised retailers is expected to outperform the industry," Vipin Jindal, assistant vice president and sector head at Icra said.