Despite the introduction of hallmarking standards 15 years ago, only 30% of jewellery in India is hallmarked, with the unorganised sector being the main culprit, according to the latest study by the World Gold Council (WGC).
“Industry experts believe there should be one hallmarking centre for every 20 to 30 jewellers, suggesting a national network of more than 1,000 hallmarking centres. Yet with just 330 centres, many are under-utilised and usage at some is as low as 10%,” said the study, released on Thursday.
Even hallmarked jewellery may vary in purity from store to store.
Although a survey of predominantly educated and wealthy people indicated that a half of them was willing to pay more for purity assurance, there was considerable resistance to hallmarking within the unorganised sector, the WGC said. Since small independent stores benefit from undocumented sales, including in terms of their tax outgo, they are reluctant to follow the hallmarking standards. According to another study, by AT Kearney, the unorganised sector — primarily comprising local and independent stores — made up for 78% of the country’s retail gems and jewellery market.
The WGC study said the Bureau of Indian Standards (BIS) lacks adequate resources to tackle these challenges, so monitoring and enforcement are weak, according to the study. Under-caratage is still in the 10-15% range, although it’s still better than 20-40% in 2000.
“A credible hallmarking system with a wide-spread presence of assaying and hallmarking centres is essential for both the jewellery industry and for the successful implementation of the gold monetisation scheme. Hallmarking is to jewellery what ‘know your customer’ norms are for financial services,” said Somasundaram P R, managing director with WGC (India).
The WGC has suggested that the government incentivise and facilitate targeted expansion of hallmarking centres and use the BIS data to develop a rating system for jewellers. The government should also “pilot BIS’ unique ID scheme or other technology solutions to support hallmarking”, among other things, it added.
In June, the cabinet cleared a new bill to replace the 29 year-old BIS Act, aimed at bringing in more products under the mandatory standard regime and ending the license raj system.
The Bureau of Indian Standards Bill, 2015 provides for including “services, besides articles and processes under the standardisation regime” apart from just 92 products and systems currently covered under the mandatory system. The new Bill also has provisions for compulsory hallmarking of precious metal articles. It also seeks to enhance penalties and make offences compoundable and simplify certain provisions in the earlier Act.
It will also enable the government to bring under the mandatory certification regime such article, process or service which it considers necessary from the point of view of health, safety, environment, prevention of deceptive practices, security etc.