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During the second quarter of the current calendar year, India achieved an all-time record consumption of 317 tonnes, equivalent to half of the global mine output for the period.
Philip Olden, managing director and chief marketing officer, World Gold Council, said, "Currently, the council is investing about $16-20 million in India. But our commitment to India is increasing and we plan to more than double the investment in the next three years."
WGC perceives growth of organised retail in India as a positive sign to encourage gold promotions in the country. The Rs 70,000-crore Indian jewellery market is getting more organised as jewellery firms are on retail expansion, traditional jewellers are expanding in newer markets and corporates such as Reliance Retail are planning to launch specialty chains. The council has identified strategic tie-ups to influence retail and improve occasions for buying gold in India.
Apart from the existing tie-ups with D'damas and Tanishq, the WGC is developing a cooperative marketing plan with Reliance Retail for its jewellery retail foray. The cooperation will enable Reliance to rope in jewellery brands as well as introduce its private jewellery labels. The WGC will also aid Reliance Retail in advertising campaigns and developing merchandising and training programmes. Olden said, "We are helping Reliance Retail in terms of identifying the best sources in gold jewellery not only in India, but also in other markets around the world. It is a combination of understanding the partner and adopting a strategic approach to help them in achieving their commercial objectives through value-added initiatives."
Among the other initiatives, the WGC will promote AuDITIONs, the gold jewellery design contest, along with AngloGold Ashanti. Keyur Shah, joint director, WGC said, "The Indian market suffers from very thin margins in gold as Indian consumers are aware of the daily gold prices and hence tend to bargain. The trade doesn't have enough profitability to invest. The only way they can justify a better premium is to provide value addition with better designs and more aspirations."
Conventionally, Indians buy gold on specific festivals such as Diwali. However, following its success with the Akshaya Thritiya festival, the WGC is looking at increasing gold-buying occasions in India. It would be encouraging gold purchase during the Gurupushya Nakshatra. Shah said, "Pushya Nakshatra occurs for a few days, when the constellation is such that the period is considered auspicious for buying gold, particularly in Maharashtra and Gujarat. Culturally, these days are auspicious throughout India, but people are not aware about it. This is where the trade and the council can collaboratively undertake promotional programmes."
Olden mentioned that it was a common misconception that gold demand was equivalent to economic growth. The demand for gold in India in the past four years exceeded GDP growth. He said, "In 2003, demand in India was actually declining even if there was economic growth and then things just turned around. It is a combination of affordability and desirability, the latter being driven by making gold more attractive to consumers, particularly women."