Gold prices in India can vary widely, depending on the region. For example, on September 11, 2024, the price of 22kt gold in Mumbai was Rs 67,700 per 10 grams, while in Kolkata, the price was Rs 69,582. Once accepted as inevitable, this disparity – influenced by logistics costs, and regional market dynamics – now stands at the heart of an industry-wide debate on pricing standardization.

The push for a standardized gold price, known as the One Nation, One Rate (ONOR) initiative, has been gaining momentum of late. Spearheaded by trade bodies such as the All India Gem and Jewellery Domestic Council (GJC), the proposal aims to introduce a uniform price structure that would bring transparency, trust, and consistency to the Indian gold trade.

Regional Pricing Disparities

Rajesh Rokde, Vice Chairman of the GJC, offers an example to highlight the pressing need for the ‘one nation, one rate’ initiative to be adopted. "The jewellery market, especially in the western part of India, is facing a tough time. Take for instance the fact that in Gujarat, while 22kt gold should be selling at 92% of the 24kt rate, we are seeing it sold at 86% or 87%, which is unsustainable," he explains.

This disparity creates confusion among customers, as many focus solely on the base gold price. “Since jewellers are not dealing in raw gold, some may adjust their profits (to make up for these figures) through making charges. Meanwhile, when customers see a low base price, they assume they are getting a better deal without considering the overall cost, including making charges, and this leads to distrust and misunderstanding in the market,” Rokde adds.

This pricing strategy is putting pressure on small and medium-sized businesses, many of which are struggling to remain competitive in the face of such aggressive undercutting. “When prices are steady, it is easier to build trust, as customers know they are getting a fair deal. As of now, we make sure to list the actual prices, ensuring transparency, and if customers ask about the price of gold, we share the rate through trusted sources," says Tilak Tholasi of Mysore-based Tholasi Jewels.

The impact of this pricing war extends beyond just the businesses themselves. It has the potential to destabilize the market, affecting consumer trust and the long-term sustainability of the industry. GJC has been proactive in addressing this issue. "We have received continuous feedback from Gujarat jewellers and associations, urging us to step in and address the situation. Our mandate is to safeguard the industry’s interests across all sectors, and we have been in discussions with jewellers across India to find a solution," Rokde says. 

GJC's Proposed Solution

To address this, GJC has proposed a standardized approach to pricing. "It is crucial that we set a base price at 92% of the 24kt rate for 22kt gold, so the playing field is fair. The law prevents price cartelization, so the government is unlikely to intervene here, but as an industry body, we have recommended a base rate of 92% for 22kt gold. This ensures a minimum rate, and jewellers can then add any premium they wish beyond that,” explains Rokde. By setting a minimum rate, GJC hopes to prevent unsustainable undercutting, while still allowing jewellers to adjust their prices based on local market conditions and individual business strategies.

Recognizing that such a significant change requires broad consensus, GJC is actively working with stakeholders across India. Detailing GJC’s efforts, Rokde says, "We have already had meetings with key players — family jewellers, corporate chains, and associations —across regions. We have also met industry stakeholders of Kerala, which has 30% of the market. Our next major meeting is scheduled for September 24 at Jio World Convention Centre in Mumbai, where we will present all our points."

The Case for Stable Pricing

Further explaining the situation, Rokde says, "Earlier, jewellers in different regions had to charge additional premiums for various reasons, such as varying tax, and so on, but with the abolition of octroi, and the efficiency of GST refunds and improvements in infrastructure that have led to improved logistics, such costs are now limited."

These reforms have removed some of the historical justifications for regional price variations, potentially paving the way for more standardized pricing across the country. However, they have also created a new set of challenges as the industry adjusts to these changes.

While GJC focuses on industry-wide solutions, individual jewellers are also recognizing the benefits of more consistent pricing strategies. Tholasi, for instance, emphasizes the advantages. "From a business perspective, we can focus more on a single pricing strategy. For customers, consistent pricing reduces confusion about fluctuating rates, and helps them feel more confident in their purchase decisions. When prices are steady, it is easier to build trust, as customers know they are getting a fair deal,” he says. Uniform and consistent pricing also reduces the pressure on jewellers to constantly adjust prices to remain competitive. By providing clear, consistent pricing information, jewellers can help educate consumers, and potentially reduce the misunderstandings that might arise while buying and selling gold. 

Hope on the horizon

The good news is that GJC is optimistic about reaching an industry-wide agreement soon. "Where does it end if jewellers keep undercutting each other? This is why GJC stands firm in promoting ethical practices. Already, we have seen that 75% of the industry is on board with our base rate proposal. This will ensure a stable and fair market for all.

The upcoming meeting in September at the Jio World Convention Centre in Mumbai could be a significant milestone in addressing these pricing challenges, Rokde believes. “As stakeholders from across India's jewellery sector come together, the industry has an opportunity to forge a new path towards more stable, transparent, and fair pricing practices. We are hopeful that, by the end of the month, we will reach an industry-wide agreement to follow this ethical pricing approach,” he says.