Proper hallmarking could increase gold exports to $40 bn by 2020: Feels WGC

If under-caratage of gold, which is anywhere from 10 per cent to 14 per cent on an average with extensive difference in purity, is monetised by Hallmarking then India's gold exports could increase from $8 billion to $40 billion by 2020 and create an additional 2.5 million jobs in the industry if hallmarking of gold jewellery becomes consistent and regulated. Currently, only about 30 per cent of Indian gold jewellery items are hallmarked.

A report by World Gold Council (WGC), 'Developing Indian Hallmarking - A roadmap for future growth', states "Gold jewellery is still affected by the under-caratage of anywhere from 10 per cent to 15 per cent, on average, with widespread differences in purity." The report gives an in-depth analysis of the current hallmarking system in India as well as makes possible recommendations to improve the state of affairs. The hallmarking of gold, which is voluntary in nature at present, is a purity certification of the precious metal.

Speaking at the release of the report, WGC's Managing Director India, Somasundaran PR said, "A credible nationwide hallmarking system is expected to boost the Indian industry's credibility in the global jewellery sector in addition to contributing to the success of the gold monetisation scheme." Hallmarking is expected to boost the credibility of Indian jewellery and thereby drive demand from retailers and wholesalers in Western markets. The current hallmarking system under the Bureau of Indian Standards (BIS) was introduced in 2000. As of now, there are about 400 hallmarking centres across the country but their zone-wise distribution is uneven.

“More than 60 per cent of hallmarking centres are in India's 20 largest cities and even within cities; they are often clustered in certain areas,” as per the report. Though under-caratage in gold has reduced to 10-15 per cent from 40 per cent since the introduction of BIS hallmarking in 2000 yet challenges still remain, it added.

“Even though, 30 per cent of jewellery is now hallmarked, there are concerns about the quality and credibility of some hallmarking centres. This means the percentage of jewellery hallmarked accurately is expected to be even lower than 30 per cent,” WGC said in the report. According to the findings of WGC, the BIS does not have dedicated laboratories for gold hallmarking so there is little capacity for testing jewellery. There are relatively few BIS branches too, so activity varies widely across India.

As part of it recommendations, WGC said that if membership of the International Hallmarking Convention (IHC) is not possible, then "India should take the lead in propagating the idea of an Asian convention." It also recommends that India's current hallmarking model, built around independent hallmarking and assay centres, should be retained.

The report states, "The development of a more stringent system would deliver huge benefits to the Indian gold market including: increased trust amongst overseas buyers and financial markets, resulting in a larger export market, a stronger domestic market and job creation across the spectrum."