After several extensions, the Government of India has made hallmarking for gold jewellery and related items mandatory. This means that from now on, jewellers will be allowed to sell only 14, 18 and 22 carats.
But what does this mean for buyers? This mandatory purity certification ensures that buyers can trust what they buy is genuine.
Remember, hallmarking in India may have been voluntary but it is far from a new phenomenon.
The Bureau of Indian Standards has been running a gold hallmarking scheme for the last two decades.
Furthermore, the Centre says that the number of hallmarking centres in the country have seen a 25 percent rise in the past 5 years.
Nearly 14 crore articles can be hallmarked in a year with the existing capacity of these centres.
However, given that hallmarking centres face lower profitability and need to operate at 50 percent capacity to breakeven, they are in need of tax breaks and other incentives. The emphasis on hallmarking has left the industry with the concerns that this number of centres might still not suffice.
The lack of clarity on storing non-hallmarked jewellery and old stock has also seemed to have compounded the concerns.
Furthermore, global consumers do not recognize Indian hallmarking and this could hinder sales to foreign countries who request jewellery that's not allowed by India’s standards.
So, what steps can the government take to ease the industry's concerns and how prepared is the bullion industry for these change? To discuss that and more, CNBC-TV18’s Manisha Gupta spoke to PR Somasundaram, MD of India of World Gold Council; Chirag Sheth, Principal Consultant at India Metals Focus; Surendra Mehta, Secretary at IBJA, and Colin Shah, Chairman of GJEPC.
Somasundaram said, “Trust is very important and people with a hallmarking certificate of the jewellery will feel a lot more confident that there is some process behind this trust. So, I am very positive and it has been in the works for near two decades so it hasn’t come a day late or a day sooner so I think it has got some transition problems and that would be addressed.”
Sheth said, “I believe that we are going to have another probably 6-9 months of a teething problem with regards to lack of clarity with regards to lack of hallmarking centres in smaller towns."
"There are still some discussions going on whether the manufacturers should hallmark this or whether it should be the retailer’s responsibilities. So there are these issues which are there and I think it will take another 6 months or so for things to normalise.”
Mehta said, “Unique identification number (UID) is the major issue because the jeweller sells good on a mix and match basis at the retail counter and UID software is not capable of taking that mix and match point into its software so that is one of our major concern. Traceability is another concern because most of the jewellers would not like their customer name and data to be revealed to the authorities.”
For full interview, watch accompanying video...
(Edited by : Bivekananda Biswas)