A delegation from the GJEPC, led by Chairman  Kirit Bhansali, met  Rajesh Agarwal, Additional Secretary, Ministry of Commerce and Industry, to discuss the impact of the reciprocal tariffs imposed by the US on India’s gem and jewellery exports. Also present at the meeting was  R. Arulanandan, Director, Department of Commerce.

The delegation included  Shaunak Parikh, Vice Chairman, GJEPC;  Adil Kotwal, President, SGJMA; and  Sabyasachi Ray, Executive Director, GJEPC. The leaders presented industry concerns and deliberated on possible measures to mitigate the impact and chart the way forward.

• Gold prices have plummeted by over $200 (~Rs 4000) from their high of $3509 (~Rs 99350) due to U.S. President Donald Trump’s retraction of threats to fire Federal Reserve Chair Jerome Powell and expressed optimism for a trade deal with China, decreasing gold’s safe-haven appeal.
• At a news conference yesterday, US President Donald Trump stated that his conversations with China are going well and that he believes they will achieve an agreement. He stated that China’s tariffs would not be as high as 145%, but would not be zero.
• Despite his frustration with rising interest rates, Trump stated that he does not intend to fire Fed Chair Jerome Powell.
• Russian President Vladimir Putin has indicated that he is willing to lead talks with his Ukrainian counterpart, Volodymyr Zelenskyy, raising hopes for a ceasefire deal and bolstering investors’ appetite for riskier assets.

• At a news conference yesterday, US President Donald Trump stated that his conversations with China are going well and that he believes they will achieve an agreement. He stated that China’s tariffs would not be as high as 145%, but would not be zero.
• Despite his frustration with rising interest rates, Trump stated that he does not intend to fire Fed Chair Jerome Powell.
• Russian President Vladimir Putin has indicated that he is willing to lead talks with his Ukrainian counterpart, Volodymyr Zelenskyy, raising hopes for a ceasefire deal and bolstering investors’ appetite for riskier assets.

Technical Triggers  

• As suggested yesterday, if prices fall below $3450 (~Rs 97000), we may see a topping-out signal and profit-booking can move prices southward to around $3300, the same thing has happened. Now prices are expected to trade in the range of $3320 (~Rs 95500) to $3400(~Rs 96500).
• Silver prices have been trading in the range of $32 (~ Rs 94000) and $33 (~ Rs 97000) and are expected to continue same range this week.

The continued rise in retail gold prices to an all-time high is expected to reduce the sales volume of organised gold jewellery retailers by 9-11% in fiscal 2026. However, with prices and realisations expected to be significantly higher on- year, revenues will still grow 13-15%.

This comes on the back of four straight years of more than 20% revenue growth, which has seen the industry grow 2.5 times since fiscal 2021. Volume, however, has remained subdued with consumers purchasing smaller quantities amid budget constraints due to higher prices.

An interplay of multiple factors is visible amid the continually rising gold prices. For one, as demand wanes, retailers are pushing sales through promotions and discounts amid increasing penetration in Tier 2 and 3 cities. The resultant increase in costs, however, will be more than covered by jewellery getting sold at prices higher than the purchase and making prices. Thus, operating profitability will rise 30-40 basis points (bps) on-year, driven by inventory gains.

The higher prices will also push up working capital borrowings for purchasing inventory for existing and planned stores. Nonetheless, leverage will remain under control and debt protection metrics healthy, supporting credit profiles.

A Crisil Ratings analysis of 60 gold jewellery retailers, which account for a third of the revenue of the organised jewellery sector, indicates as much.

In fiscal 2025, retailers took a 4-5% hit to volume as gold prices soared ~25% on-year (refer to Chart 1) amid geopolitical and economic concerns. As of mid-April 2025, gold prices are already ~20% higher than the average price in fiscal 2025. Thus, even if the prices move up only 4-5% from here, the average price will still be up 22-24% on-year for fiscal 2026.

Says Himank Sharma, Director, Crisil Ratings, “The recent jump in prices came just before the start of the festive and marriage seasons in the first half of April 2025, limiting the impact on demand thus far. However, as ticket sizes for buyers are likely to remain constant, caratage and grammage may reduce, as seen in the last four fiscals, impacting volumes. The demand, though lower, remains supported by duty cuts on gold imports announced last year.”

As such the implementation of Goods and Services Tax and Bureau of Indian Standards hallmark continue to push customers towards organised retailers, supporting revenue growth. Higher realisations will push another year of double- digit revenue growth for organised retailers, resulting in revenues of Rs.4.5-5.0 lakh crore for the industry.

Says Gaurav Arora, Associate Director, Crisil Ratings, “Despite the increasing debt, the capital structure of gold jewellery retailers will remain comfortable. Improved revenues and operating profitability will absorb the impact on debt protection metrics as well with median interest coverage seen healthy, over 6 times in fiscal 2026.”

The higher prices will have a two-way impact on retailers. One, with jewellery sold at prices higher than the purchase prices, resulting in an inventory gain of 20-30 bps, we expect the operating margin to break the declining trend of the last two fiscals and inch closer to the seven-year average of 7.8-8.0% in fiscal 2026 (refer to Chart 2). Two, the debt of gold jewellery retailers rated by Crisil Ratings will rise as the cost of inventory replenishment as well as new store inventory rises with higher prices, although higher revenue and profitability will provide cash flow towards store expansion.

That said, any sharp volatility in gold prices, changes in government regulations and import duties on gold, and consumer sentiment will bear watching.