India's Gold Demand Defies Modi's Tariff Hike and Appeal
India's gold demand remains robust despite efforts by Prime Minister Modi to curb it. In May, amidst an oil price shock exposing India's energy dependence on the Gulf region, Modi more than doubled the gold import tariff to 15%. The government also issued a rare appeal for Indians not to buy gold unless absolutely necessary.
The World Gold Council data shows that sales of gold jewelry in India surged by about one-third year-on-year in the quarter ending June, reaching $21 billion. Major listed jewelers reported strong quarterly earnings, with revenue growth ranging from 30% to 60%. Titan Company, part of the Tata Group and India's largest jewelry retailer, saw its profits soar by 63%, with store traffic also rising.
Ajoy Chawla, Managing Director of Titan Company, said that market demand is driven more by consumers' price expectations. 'Their love for the product and for gold has always existed, and that will not disappear,' he noted. 'They see it as a way to store asset value.' Despite increasing investments in stocks and mutual funds, gold's favored status remains undiminished.