Panel keen to push certification drive

In focus / Gold hallmarking

The gold committee recently set up by the ministry of commerce will meet in a week's time to review the hallmarking system for gold, which has not taken off as expected since its launch four years ago.

The current system is under the Bureau of Indian Standards (BIS) but it is not mandatory for all jewellers to mark gold jewellery between 9 carat and 22 carat or 24 carat.

Just over 600 jewellers out of and estimated 300,000 have adopted hallmarking at present and only around 35 lakh pieces have been hallmarked.

According to bullion consultant Madhusudan Daga, the system has failed due to lack of adequate facilities and procedural hitches.

He pointed out, "There are not enough institutions or laboratories in the country to carry out the activity."

To make the system effective, hallmarking should be made mandatory. This would ensure compliance and prove less expensive, he added.

The prevailing system in Thailand allows dealers to mark the purity on their gold themselves.

However marking wrong caratage is a punishable offence under law.

If convicted, a trader's licence can be cancelled and they have to serve time in prison.

According to BIS figures, India is the largest consumer of gold jewellery at over 500 tonne but less than 2.5 tonne of this consumption is under the gold hallmarking scheme.

Indian traders find the present system uneconomical as it pushes up the cost of jewellery by at least 2-3 per cent.

The hallmarking licence costs Rs 25,000, which bigger traders and jewellers can afford but smaller traders cannot.

Arun S. Kaigaonkar, chairman of the Chintamani group and vice-president of Mumbai Gold Club, said, "Additional hallmarking costs are unviable for small traders as customers have a choice between hallmarked jewellery and uncertified jewellery of roughly similar quality."

The profit margin of jewellers is under pressure as a margin of approximately 15 per cent has to be split between the manufacturers who get 8-10 per cent, wholesalers who bag 2-3 per cent and retailers who mop up 6-8 per cent.

A large part of the industry is unorganised.

In comparison, branded jewellery is sold at a fixed retail price and so sellers enjoy better margins.

The managing director of the World Gold Council, Sanjeev Agarwal, said, "The committee would meet to take forward the issues discussed last year, of inadequate spread of assaying centres across the country."

Daga said the meeting will try to decide the fate of traders next week but ironically, no representatives from manufacturing or trading segments will be present, as the members are mostly technocrats.