India’s organized gold-jewelry sector will grow by up to a quarter this fiscal year as demand increases and regulations make the larger players more competitive, a credit agency has forecast.

Wedding and festive sales will boost major retailers’ top lines, as will greater disposable incomes and higher gold prices, Mumbai-based Crisil Ratings said last week.

Specifically, mandatory hallmarking and higher adoption of India’s goods and services tax (GST) across the country will strengthen the formal sector, which accounts for almost a third of the market, Crisil pointed out.

In this context, revenue at organized jewelers will increase by 23% to 25% for the 12 months ending April 30, down from a 36% jump in the previous fiscal year, the company projected. Sales volume will rise by 16% to 18% for a total of 670 to 700 tonnes, it predicted. The agency surveyed 76 gold-jewelry retailers accounting for around 33% of the organized sector’s INR 3.5 trillion ($42.27 billion) in annual sales.

The company cited “pent-up demand and [a] recovery in discretionary spending.” Jewelers will expand their store networks by 10% to 15% over the next two fiscal years in response to the higher sales, it forecast.

Despite the overall positivity, “sharp volatility in gold prices, changes in government regulations and import duties, as well as consumer sentiment, will bear watching,” the company noted.

Revenue growth will slow to between 8% and 12% in the 12 months ending April 2024 due to the high base of comparison as well as a likely decline in disposable income, Crisil estimated.