Hallmarking Issues That Need Clarifications

Precious metal analyst, Sanjiv Arole, puts forth his views on mandatory hallmarking, highlighting several issues that need clarification for it to function seamlessly.

Victor Hugo’s famous quote, “Nothing is more powerful than an idea whose time has come” aptly fits the current hallmarking scenario more than anything else. In fact, this has been an issue that has been pending for over 20 years.

Hallmarking was first introduced on a voluntary basis in 2000 and then compulsory hallmarking first mooted in 2007. Since 2013, the hallmarking notification has been postponed several times.

Finally, on 16th June 2021, mandatory hallmarking was formally introduced in 256 districts across India. Although over one crore gold jewellery pieces have been hallmarked till recently under the new system of hallmarking, one cannot say that hallmarking is up and away. For, with huge trust deficit between the trade on one side and the Government on the other, there are quite a few issues that need to be sorted out before the hallmarking system could set sail into the high seas.

The Government on its part did give several concessions to the trade to set the ball rolling on hallmarking. However, total mistrust, misinformation and lack of communication led to sections of the trade to go on a one-day strike in August. The Government hardened its stand even as fissures appeared within the trade itself. There was also confusion over some of the new proposals by the government and changes and clarifications sought by the trade. Things could clear out once notifications come out.

There are a number of issues that need clarification. Some of these are enumerated below:

(a) The Rs.40 lakh turnover exemption limit for jewellers/ retailers from mandatory hallmarking in the 256 districts. However, there is some confusion as there is news in circulation that it also implies for those with a turnover of less than Rs.40 lakh cannot sell hallmarked jewellery. In short, to sell hallmarked jewellery one must register with The Bureau of Indian Standard (BIS). A clarification or notification required to clear the air on the matter.

(b) Some in the trade feel that hallmarking is being diluted and that it could defeat the purpose for which it was introduced. Initially, it was stated that the HUID (hallmark unique identification number) would be only at the accredited hallmarking centres. This HUID was supposed to be non-transferable. Now it seems HUID could go down to the retailer’s level as well. This could lead to more confusion and dilute the hallmarking process. Then, it seems that the BIS is actively encouraging jewellery business houses to set up hallmarking centres so that more such centres come up. But, then what happens to independence of hallmarking centres. Would it not defeat the very purpose for which it was introduced in the first instance? A notification is needed here.

(c) Recently, it was reported in a section of the press that hallmarking was postponed by 3 months. However, this postponement is only restricted to declaration of old stock.

(d) There are many in the trade who do not want more categories of purity standards as they feel that unscrupulous in the trade would take advantage of multiple levels and sneak through jewellery of lower purity. Then, there is a growing demand to include coins, bars and even artefacts to be included in hallmarking. For, here, too, purity standards have been compromised. They aver that whenever hallmarking is made mandatory for silver even bars, coins, etc., it should be included in hallmarking. In silver, purity levels are abysmal and mandatory hallmarking a must as soon as possible. The number of pieces in silver could be humongous.

(e) Once upon a time, cadmium was very popular in jewellery making as a replacement for lead as it added mass and shiny finish to the piece. It was also seen as a sign of purity in jewellery pieces. However, since the last 20- odd years when it became universal that cadmium was not only toxic but a suspected carcinogen as well, the world shunned it. However, India continues to use it. Many feel that not only should cadmium not be permitted in jewellery its imports too should be banned.

So, we have the Government wanting to impose its will on erring jewellers, retailers and even hallmarking centres (BIS found a number of hallmarking centres not operating under the new specifications) and accelerate the hallmarking process. It is impatient to govern and regulate the gold trade and earn revenue. On the other hand, a few unscrupulous in the trade used to old system of purity in gold jewellery are willing to try any trick in the book and beyond to try and postpone, disrupt or stall the hallmarking process. The hallmarking system once made mandatory all over India could see a consolidation in the trade and some not willing to conform to purity standards fall by the wayside. There should no remorse for few such entities.

Finally, the customer/ consumer of jewellery who should central to the whole hallmarking process appears nowhere in the picture. Is customer really the king?

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