Indian Jewellers Launch Cash-for-Gold Schemes Amid Volatile Demand

Indian jewellers are rolling out cash-for-gold schemes to counter high prices and volatile demand ahead of the festive season. Kalyan Jewellers India Ltd, Titan Co., and Joyalukas have introduced or expanded these programmes since June.

The programmes allow customers to trade in old jewellery for cash, differing from conventional exchange offers where old gold is exchanged for new jewellery purchase. This move comes after a difficult period for fresh-gold demand, with Prime Minister Narendra Modi urging Indians to postpone gold purchases for a year to conserve foreign exchange and the government raising the effective import duty on gold to 15% in May.

Kalyan Jewellers' executive director Ramesh Kalyanaraman said that cash-for-gold is 'really catching up', potentially negating margin dilution caused by exchanges. The company's share of cash-for-gold rose to double digits from single digits in the June quarter, and it expects this business to be margin-accretive.

However, not all retailers are seeing significant traction with cash-for-gold schemes. Titan's chief executive Arun Narayan said that customer response has been limited so far, while analysts expect demand to improve during the festive season as weddings contribute 60% of gold purchases in India.