The reforms process started of with the abolition of the Gold Control Act in 1990. Thereafter, the supply side of the bullion trade (gold and silver) has undergone a sea change.

Imports of gold and then silver were first liberalised in 1991 and 1992, then the Gold Bond (1993) was floated (with the immunity clause). Thereafter, gold was imported first under Special Import Licence (SIL) and then under Open General Licence (OGL) and, finally the Gold Deposit Scheme (GDS)in September 1999.

It can safely be said that most of the major demands of the bullion trade have been met. Derivatives trading for all players is eagerly awaited in the next year and the starry-eyed now look forward to a bullion exchange and `Mumbai-loco gold’.

However, precious little has been done on the quality of jewellery sold. The unfortunate consumer has still to contend with sub-standard jewellery being sold as 22-carat with no recourse. The trade seems unwilling to voluntarily adopt assaying and hallmarking of jewellery, while the government fights shy of passing a law to make it mandatory.

Of course, quality of jewellery has improved with the market forces putting pressure on jewellers, though slowly. Moreover, a draft scheme of testing and inspection for certification of gold jewellery/articles for fineness marking as per the IS:1417-1999 was recently finalised at a WGC workshop and, BIS at Kathmandu. But what should have been at the top of the agenda in the early 90’s will now (hopefully) see the light of the day only in the next millennium.

Many jewellery shopowners argue that they will buyback the jewellery purchased from their shop. But, this argument is specious. If a person buys gold jewellery he should be at liberty to sell it anywhere in the world. Indian jewellery should be internationally accepted and the hallmarking standards conforming to the Vienna Convention. Further, it is well-known that most of the jewellery purchased in India is in cash with no receipts-in order to avoid the high incidence of sales tax. It is also a well-known trade secret that even reputed jewellery shops get their jewellery from the bulk manufacturers, specifically asking for lower caratage, and then put their own mark of higher caratage.

It must be understood that quality standards are best achieved only when the players themselves believe in quality norms. Rules only tempt more people to circumvent them.

It is indeed ironical that the very trade which fought for almost 30 years against the obnoxious Gold Control Act now awaits a mandatory law to implement hallmarking. True, the Gold Control Act took gold back to the `Dark Ages’. It was responsible for the smuggler’s entry and firm entrenchment in the bullion trade.

It also pushed the trade underground and made all jewellery above 14-carat illegal to hold. Thus, overnight almost all jewellery became illegal (Indians prefer their jewellery in 22-carat) and what was illegal was not subject to scrutiny, probably causing standards to fall. But then, unscrupulous traders are present in any given trade at any time. What the act did was to institutionalise and universalise bad trade practices of palming off sub-standard jewellery as genuine stuff.

India fell by the wayside during the 30 years of the Gold Control Act on the gold jewellery exports front, while the rest of Asia, notably Thailand, captured the export market.

Now then, if India has to make a mark in export of gold jewellery it has to quickly set up the system of hallmarking and assaying in the domestic markets voluntarily (exporters do conform to exacting international standards). This is necessary to erase the stigma of poor quality on the `Made in India’ tag.

The GDS has finally set the ball rolling on the hallmarking front in a more organised way. It is widely expected that a system of hallmarking and assaying is all set to be launched under the auspices of the WGC and BIS within the next couple of months. Silver will also be covered under the scheme.

It is only when Indian hallmarked jewellery is accepted anywhere in the world will the Indian consumer feel assured of the quality. If necessary, the supply of legal gold through OGL could be linked to hallmarking. Basically, anything to make the purchases by the jewellery consumer more worthwhile -- that he is not cheated! The bullion trade has a lot to atone for!

IS: 1417-1999: The bottomline
The licensee (jeweller) will be required to clearly display the following information at the sales outlet: