Hallmarking Gold in India

Unlike other countries, in India, there is an emphasis on high-carat, low-mark-up gold jewellery, which is bought by weight, not by the piece. The price of a given piece of jewellery reflects two costs, the gold price and the making charges. The gold price consists of the sum total of the daily international gold price converted into Indian rupees - plus import duty and sales tax, costs which are fixed to the retailer. His margin is therefore based on the making charges, which include the cost of craftmanship/ design, fabrication and profit.

Another buying peculiarity of the Indian consumer is that he insists on having a discount or reduction in the making charges, thereby directly impacting the retailer's profit. Hence, to satisfy his clientele, the retailer is at times forced to compromise on the quality of the gold if he is to cover his costs and margins while still reducing the making charges.

It is not uncommon to see advertisements offering gold jewellery with no making charges at all. Given the inflexible cost of the gold, it is obvious that the quality must have been compromised. The Indian consumer has very often been a victim of irregular metal quality and frauds, such as the adulteration of jewellery, use of lower ­ caratage soldering, or use of gold or silver articles that are external of standard fineness but have base - metal cores.

Consumers and the trade and regulatory authorities all recognised the need for a quality assurance mechanism similar to those in place for many other product categories. This would keep the consumer from becoming a victim of irregular product quality and will help develop the industry's competitiveness in exports, providing a strong impetus for exporting gold jewellery and helping the gold trade to function more efficiently.

Reaching Standards

The launch is the culmination of an initiative by the Bureau of Indian Standards (BIS- the premier national body in India for the preparation and promotion of quality certification schemes), the jewellery trade and the World Gold Council. It started with a feasibility study conducted by the WGC in 1996 to understand how hallmarking could be introduced in India. Extending beyond the study, the Council facilitated meetings between the BIS and the trade to understand the issues and peculiarities of the Indian gold trade. These discussions were instrumental in formalising the policy and process for the Hallmarking Scheme, which has been well accepted by the trade and consumers. To date, applications from over 90 retailers have been received, out of which more than 50 have received their license and are already selling hallmarked jewellery. The number of assaying and hallmarking centres is also growing rapidly.

The hallmarking scheme was introduced on a voluntary basis under the BIS Act 1986. The BIS Precious Metals Sectional Committee ( MTD 10) has formulated and published the following Indian Standards :

• IS 1417 - Grades of gold and gold alloys
• IS 1418 - Method for assaying gold in gold and gold alloys
• IS 2790 - Guidelines for manufacture of 23,22,21,18,14,12 and 9 carat gold
• IS 3095 - Guidelines for the manufacture of solders for use in goldware
• IS 3541 - Code of practice for the manufacture of 23. 3 and lower carat gold alloys
• IS 8844 - Guidelines for marking purity of gold and gold articles/ornaments

BIS-recognised Assaying & Hallmarking Centres will certify the purity of gold jewellery. Jewellers certified by the BIS will have a license to get their jewellery assayed and hallmarked by any such centre. To become accredited, centres must conform to the BIS criteria and follow international norms for sampling, assaying and hallmarking. They must also have adequate testing facilities staffed with trained and competent manpower.

The launch of this voluntary scheme is a major step forward for the Indian jewellery industry and the consumer. The consumer receives third-party assurance in a Fragile market and satisfaction that they have the correct purity of gold for the price paid.

The trade benefits through giving their customers an assurance of the go-between and quality of their jewellery. Most importantly, it demonstrates the commitment to quality and quality management.

The move towards hallmarking of gold in India is critical to the success of Indian endeavours to emerge as a major player in the international gold markets. Not only does it fulfil its primary objective protecting the public, but also serves the interest of the trade itself since it creates a favourable image of Indian gold jewellery in the international market and will allow it more acceptability and therefore freer access across borders. It will help grow the export market for Indian producers and serve as an example to other countries with a significant jewellery industry hut no effective national independent national marking system.