The inaugural India Gold & Jewellery Summit became ground zero for discussions on policy that will steer the course of the country’s gold and jewellery industry for the better part of the next decade. REGAN LUIS reports.
The India Gold & Jewellery Summit organised by the Gem & Jewellery Export Promotion Council (GJEPC) was a watershed moment for the industry. The event brought together more than 500 international leaders of the gold and jewellery sector, senior government officials, bankers, analysts, gold miners, refiners, and jewellery retailers among others.
Held in New Delhi at Vigyan Bhavan and The Ashok Hotel on December 1st and 2nd respectively, the conclave facilitated comprehensive discussions on the many pressing issues currently affecting India’s gold and jewellery sector. Hearteningly, there was almost unanimous agreement on the necessary course of action for the industry to reach its stated goals of $22 billion in jewellery exports by 2022, and $25 billion by 2025.
Chief among the industry’s requests from the government was the need for a comprehensive policy on the gem and jewellery sector with the objective of bringing both organised and unorganised jewellers under one roof to boost exports. Several speakers also pointed out the need for greater coordination between the commerce and finance ministries, the lack of a single regulator for gold, and the deluge of regulations from multiple agencies.
The two-day summit was inaugurated by Suresh Prabhu, minister of commerce & industry, in the presence of Rita Teaotia commerce secretary, who underlined the need of a policy framework for the growth of the industry. Finance secretary Hasmukh Adhia, who attended the summit on the second day, clarified the government’s stance on the trade’s request for a reduction in the gold import duty and inclusion under Merchandise Exports from India Scheme (MEIS).
Hearteningly, there was almost unanimous agreement on the necessary course of action for the industry to reach its stated goals of $22 billion in jewellery exports by 2022, and $25 billion by 2025.”
In his welcome address, GJEPC chairman Praveenshankar Pandya gave a broad overview of the industry and the challenges it is facing. “The centuries-old infrastructure is now dilapidated and we need strong infrastructure like Jewellery Parks, which will be a one-stop shop for all the 22 permissions required for opening a factory. Since 1998, gold has come under the purview of different agencies like the ministry of finance, Reserve Bank of India (RBI), the Director General of Foreign Trade (DGFT), Department of Revenue, Department of Economic Affairs, and the Tax Research Unit (TRU), which are not working in tandem to offer a long-term policy to our industry.”
Pandya emphasised the need for a structured five-year plan for the supply of gold for the industry. “Gold should not be available in the grey market below the official price. But in order to do that, the gold duty should be reduced from 10% to 4%. The resulting revenue loss will not be high, but the impetus it will give to the industry will be so big that in the next 10 years the five top jewellers of the world would be Indians. India has more workers in the gem and jewellery sector than any other country.”
Pandya noted that the target of $22 billion by 2022 and $25 billion by 2025 in jewellery exports from the country will create 3 million more jobs. “And I see no reason why we cannot achieve this. I urge the government to consider offering MEIS –
not on total exports because that can be misused – but on value addition created by the industry, so that the profitability that is missing will come back.”
He outlined some of the areas where policy needed to be modified and clearly defined, appealing to the government to develop a clear framework allowing companies to take on job-work. He also asked for a mechanism by which NRIs or members of the Indian diaspora could make purchases within the country by paying directly in foreign exchange and treating such purchases on par with exports, and hence duty-free.
Pandya added, “We need a gold exchange for futures, options and derivatives so that transactions shift from gold in the physical form to paper trading. We need to give incentives so that LBMA standard, world-class gold dore is produced here. We need a single authority to follow up on gold import-export sector. So far the gold jewellery manufacturing sector has catered mainly to the domestic market. We should have strong designing capabilities to do justice to exports to fulfil requirements of international markets.”
Pandya also acknowledged that the government’s bold policy measure of demonetisation had brought almost all the transactions in the diamond industry into the formal banking sector. “Demonetisation managed to bring about the kind of reforms that the gem and jewellery industry was trying to achieve for the last 40-50 years – to stop transactions through angadias (unofficial couriers). We were unable to convince our small and medium enterprises, but with the bold step of demonetisation, all the angadias have closed down,” he said.
We need a gold exchange for futures, options and derivatives so that transactions shift from gold in the physical form to paper trading. We need to give incentives so that LBMA standard, world-class gold dore is produced here.”
Time for action
In his speech, Suresh Prabhu said, “India’s gold jewellery exports are very small, just about $7 billion. And the industry’s self-determined target of reaching $22 billion in exports by 2022 is important and we will do everything possible to realise it. I urge the industry to prepare an action plan with a clearly defined outcome; it should outline the role of the industry and government and specify what it is that we’re expected to do. The creation of a Gold Board is a good idea, but we must deliberate on how to go about setting it up. Let us have an action plan with quantifiable targets and then weave a policy around it. The centre’s policy think-tank Niti Aayog has already set up a group to formulate such a policy framework.
“Every village in India will have at least one goldsmith, and therefore this is a human resource available within the country, especially for handmade jewellery which is in high demand globally. We should now use that human resource by bringing in the best of designers in the world. With the organised support that the industry and government can provide, we can create an institutionalised mechanism that is necessary to bring exports of that magnitude. Creating this linkage would be very important: how to link the goldsmith with the institutionalised mechanism, how to link the mechanism with the government policies, and how to make sure that the policy is working. Because we can always make the best of policy, but if it doesn’t get implemented properly, it will be a challenge. We will ensure that the government and industry will work as partners to bring back the golden days of India into modern times.
“Under the leadership of our Prime Minister, we are moving towards our goal of becoming the third-largest economy in the next few years’ time. With the investment we are making in infrastructure, with the improvement in ease of doing business, with so many policies which are under implementation, when they will all be fructified you will see the benefit of all of that will result into more and more economic activity which will result in better GDP numbers. At this time, when India is rising, I think we should take all other sectors along with us and gold should be one of them.”
Prabhu noted that there is a need to develop gem and jewellery clusters and asked the industry forum to involve state ministers and make them partners for creating such clusters.
Commerce secretary Rita Teaotia assured the stakeholders of the government’s support for structural policy reforms in the sector. “Gems and jewellery is the flagship of the government’s Make in India story. It provides 5 million jobs and has the potential to be even larger, given the capacity of Indian artisans and the quality of the craft that has developed within India. We do import a lot of gold, but what we export in terms of jewellery is only 10% of that by value. If you look at where we stand in gold jewellery across the world, we are relatively smaller players. But now we need to be outward facing in a way that we are not yet in this sector.
“Another neglected area of exports is the packaging and branding aspect, which requires us to become extremely kind of skills that we are developing. We also need to look at the important infrastructure requirements such as whether we have got the mix of metals right, have we got the metallurgy right, is the machinery required for some aspects of the work available and of the right standards.
“The Government of India has been thinking of some of these issues which have been flagged. The recognition that we’ve had a lot of ups and downs with the gold policy, we haven’t revisited it over a long period of time is what has prompted the Niti Aayog to set up an inter-ministerial group to discuss what should be the components of a new gold policy for India that will push this sector forward.
“We had started the cluster scheme by providing common facility centres for small-scale companies/workers in diamonds. We now intend to ramp this up for the gold jewellery sector, and we are starting with Coimbatore, Delhi, Hyderabad, Jaipur and Kolkata, along with GJEPC’s centre in Udipi. These common facility centres at existing hubs will help the small-scale sector to organise itself with minimal or no investment and have access to the best training, technology and equipment that is available.
“We need institutions of a certain configuration. We need to have impeccable quality certifications, transparency and credibility along the value chain – these are integral to any well-organised sector. This alone will allow the sector to get the kind of respect and absence of policing from the government which is necessary to allow it to grow.
can do better. We have done allright in gold jewellery, we can do much better. We also need to work on sectors that are now very large parts of global industries, i.e. the artificial jewellery sector, man-made diamonds, studded jewellery, gemstones. It’s incumbent on the industry to focus on each of these verticals separately. It’s a completely different market, but it’s a big market. I think it’s necessary for a country with these traditions to capture all elements of the value chain. That is when this industry truly will realise its complete potential.”
Responding to the observations made by speakers for a policy framework, Hasmukh Adhia acknowledged the need of a gold policy and a Gold Board, but suggested that it was for the commerce ministry to take the discussion forward.
Adhia made three key observations: “First, the gem and jewellery industry, as a large-scale generator of jobs, is extremely important to the government. Second, the two major reforms undertaken in the last year, demonetisation and GST, have helped curb the parallel economy, and will benefit the legitimate trade across industry. Third, the government is committed to helping grow the export trade and looks forward to the day when jewellery exports exceeds domestic demand.”
Responding to the industry’s request for a reduction in the gold customs duty, Adhia noted, “The finance ministry is conscious that your biggest demand is for a reduction of customs duty on gold, and we’re also aware that the high duty is keeping the parallel economy alive. But we must understand that this is the year of GST and for the first time we have gone in for a complete transformation of our indirect tax system in the country, both at the state and central government level. We have to watch the GST revenue trend for a few more months and then take decisions, because it could dent the balance sheet of the Government of India.”
Adhia turned down the trade’s other request for inclusion in MEIS as part of a larger policy decision, explaining that, “MEIS may not last long because of WTO provisions; it is something which we are carrying on for the moment but we may have to stop it after some time. The industry should ask for a model of competition in which it is inherently competitive rather than depending on government subsidy.”
Even as Adhia pointed out that the imposition of 5% VAT on jewellery in Dubai would reduce the differential between prices in that region and India, he stressed that the government would keep in mind the role played by the jewellery industry in employment generation when it reviews the duty structure.
Trade perspective
Strengthening the argument for a cogent policy, Aram Shishmanian, CEO, World Gold Council (WGC), said, “India is a key player in the world gold market. It represents 25% of world demand, and has the highest holdings of gold anywhere in the world, at 23,000 tonnes valued at over $1 trillion dollars. But India’s gold demand is 25% below the five-year average and this could have consequences in terms of employment and economic contribution.
“Gold enables millions of people and households to save; especially the low income group who are disenfranchised from the financial system – gold is their currency of saving. Yet when it comes to policy decisions, it is preoccupied with current account deficit situations. It is seen as a challenge to the macroeconomic stability of the currency. As long as elements of the Indian gold industry continue to operate in the grey market, enabling illicit activities, these challenges will persist.
“Gold is intrinsic to India’s economic growth, for generating employment, providing households financial security and has the potential to be a valuable mainstream asset particularly as the economy is on the point of rapid growth. There must be a deep belief and courage to shape the future of the gold industry in India and we should all take that responsibility. We need to embrace a structured and structural change in the nature of the gold industry. The key reason for China’s success is that government and industry work hand in hand, and it is a great model to consider.
“The Indian gold spot exchange will enable the demonetisation of household gold and increase the circulation of domestic gold, thereby stabilising to a degree the impact of imports. It will usher in the necessary price transparency and help to provide a fair, efficient and effective trade market.”
So the best way is to not wish away the demand or try to curb it, because it leads to unintended consequences, but probably to mainstream gold savings – provide the infrastructure and standards. That is when gold will start delivering what its role is as a national economic asset.”
P.R. Somasundaram, WGC India managing director, welcomed the fact that India’s gold industry had entered an introspective mode, which he felt was reflected in the quality of discussions, an openness to debate contentious issues, the emphasis on transparency, and a broad-based, long-term approach to issues.
Somasundaram pointed out that in the past ten years India’s gold consumption has dropped from 27% of global demand in 2007 to 22% in 2016. “A 20% shrinkage might have helped the current account deficit (CAD), but what impact have curbs on gold demand such as high taxes, quantitative restrictions had on unemployment and other aspects of saving? Has it led to unintended consequences like risky savings, ponzi schemes? These will come up if there is no access to gold,” he cautioned.
The WGC’s research indicates that gold remains the second most preferred asset class after fixed deposits and is the primary savings tool for women.
He noted, “Some of the other key issues facing the gold industry in India are shrinking of a manpower-rich industry. Imports affect CAD as domestic sources are limited. Also, a lack of standards is affecting integrity. We also need to understand the role of gold – is it a consumable that should be made to disappear, or is it an asset?”
He stressed: “There is no doubt India’s gold market has to be driven with a policy approach, whether it be exports, domestic demand, CAD or rural employment.”
Somasundaram outlined the four pillars on which the gold policy should be formulated:
- Standards for consumer protection – Hallmarking, good delivery, new products, fair and effective markets, data transparency.
- Infrastructure for organised markets – Spot Exchange and price benchmark, bullion banks, accredited refineries, logistics.
- Mainstream for liquidity – Gold monetisation, gold-based investment products, ubiquitous access, gold integrated into all financial practices.
- Make in India for employment – Jewellery innovation parks, Indian gold coin, skill development and employment, exports and gold tourism, managed imports.
“To summarise, the industry needs a vision, an agreed set of objectives, a central policy coordinator, a policy architecture, a roadmap for implementation, and a review mechanism,” he concluded.
Somasundaram said that the per capita gold consumption was higher in developed countries such as Singapore, UAE, Germany, and Switzerland, and it was likely that India’s gold consumption too would rise as the country gets more prosperous. “So the best way is to not wish away the demand or try to curb it, because it leads to unintended consequences, but probably to mainstream gold savings – provide the infrastructure and standards. That is when gold will start delivering what its role is as a national economic asset.”
GJEPC chief executive director Sabyasachi Ray said that India’s gold policy suffered from the Yo-Yo syndrome –
alternating between periods of liberalisation and restriction. He divided the history of India’s gold policy into four distinct phases: Gold Control Policy (1947-1963), Pre-Liberalisation (1963-1990), Post-Liberalisation (1990-2007), and Since Recession (2008-present).
Describing gold as the most over-regulated sector in India, Ray declared that the need of the hour was “one regulation, one regulator.”
He continued, “There are several examples of how well other sectors have done under a single regulator, including the Airport Authority of India (AAI), the Director General of Civil Aviation, Telecom Regulatory Authority of India (TRAI), the RBI, and the Securities & Exchange Board of India (SEBI).
“India consumes a third of global gold mine supply, and needs to formulate a Gold Exchange and an India Good Delivery standard. The gold policy should contain a stable and uniform policy on taxation, including import duty to discourage the illicit trade. The policy prescriptions should also ensure that restrictions on imports for investment in times of crisis do not disturb gold imports for jewellery, as the industry provides jobs to millions and exported products worth billions of dollars.”
India consumes a third of global gold mine supply, and needs to formulate a Gold Exchange and an India Good Delivery standard. The gold policy should contain a stable and uniform policy on taxation, including import duty to discourage the illicit trade.”
Gold exchange
Panel members on both days of the conclave determined that a gold exchange was necessary in India. They held that it would not only bring in standardisation and a degree of price transparency, but would also create Indian price benchmarks for the global trade. All agreed that a starting point would be a clear-cut regulatory framework; other details such as the type of products that could be traded, the logistics of deliveries, etc. could follow. Panellists from Dubai and Turkey aided the discussions by presenting the experiences of the exchanges set up in their countries.
Shivanshu Mehta, head of bullion, MCX, said, “Having been the premier exchange in service of the bullion industry, it also brings along answerability and accountability, being regulated under SEBI. Price discovery and delivery of last resort are two important roles of an exchange for which homogeneity and standardisation, not only of the product, but of the end-to-end process. In addition, the responsible raw material sourcing guidelines are very important for us in order to be fair to the buyers and sellers.
“A regulator is essential given the history of spot markets in recent memory. Institutions and banks need to participate to make it liquid. Also, gold cannot be viewed in the same light as an agricultural commodity and the taxation aspect has to be looked at. We are seeing a sort of salience building up for a central price. But the most important thing is that a spot exchange will also help to monetise those 20,000 tonnes for which the India Good Delivery Standard is required. MCX has been part of the working group; we are, along with leading experts, trying to help evolve the standard which is in the final stage.”
Arvind Sahay, head of India Gold Policy Centre, IIM Ahmedabad, noted, “India should be a gold price setter rather than a price taker. A gold spot exchange allows us to have a reference price. Right now it’s getting kicked around by different bodies. In India, unfortunately we haven’t yet matured enough both in terms of the industry and the government thinking that self-regulation would work at this point in time.”
Regulations and compliance
In a detailed presentation on PMLA, Balesh Kumar, principal additional director general, Directorate General of GST Intelligence, said that gold was particularly vulnerable as it was a highly acceptable medium of exchange with easy liquidity. “Gold production, trade and consumption are exposed to risks of money laundering and tax fraud. Criminals infiltrate the gold market due to amenability of gold for placement, layering and integration, and hence it is incumbent upon policy makers to ensure an efficient regulatory framework,” he stated.
Advocate Rohan Shah, a legal expert who has been a consultant to the diamond and jewellery industry on various taxation and policy issues, predicted that two issues would become relevant in the context of GST: goods valuation and pay and wages. In the first case, he noted that all disputes under GST would be about value, so invoice values should be accepted by the government except in a situation where it was proved that a parallel payment was made. On the subject of pay and wages, he said that despite employing millions of people, the industry has no regulation or standardisation of payments, and a standardisation of labour rates in the gem and jewellery industry was only 2-3 years away.
Shah said, “Ultimately, the industry will have to evolve into a stage of compliance. This will have to be a partnership between your consumer, your industry and the regulators. Government cannot over impose regulation, at the same time the industry cannot expect to have no regulation.”
Value addition
Perhaps no other segment of the jewellery industry is as vital to its future and as undervalued in the past as design. India will have to take on a leadership role in the area of jewellery design if it must fulfil its goal of becoming the world’s biggest jewellery manufacturing centre and achieve rapid growth in exports.
Rita Teaotia said, “Design is a hugely neglected area for gold jewellery and is something that seems to be left substantively to traditions. It needs to be systematic; it needs to address the needs of specific markets. But first of all, the focus on design, the kind of institutions and institutional frameworks which are necessary to actually be relevant to global markets, that’s something that needs to get established in this country. We need design schools across the country.”
Echoing those views, NID principal faculty Shimul Vyas said, “It is heartening to hear the emphasis being laid on design. I think our manufacturing prowess has been leveraged to the extent possible. If we are to achieve our target of $25 billion by 2025, I believe that that industry needs to take design very seriously and integrate it as an important component of the value chain.
“Design is not about coming up with pretty looking designs. Designers undertake research to understand the consumer markets and the target audience. Design can play a very active role from research to concept to delivery and even in creating experiences around jewellery. That is what the industry should be looking at if we want to now take India’s growth story to the next level.”
Vyas noted that jewellery has a different meaning for India’s 440 million millennials born between 1980 and 2000, who are in the age group of 17 to 34 years. “It’s no longer about cultural associations, it’s not about future security. It is essential that jewellery has to connect with who they are, it’s about their persona and individuality. Therefore the industry will have to work much harder, and design will play a very critical role in terms of connecting the product to the consumer.”
Sandeep Kulhalli, senior vice president – retail & marketing, Tanishq, said the brand was able to command a premium from the consumer because of the high level of differentiation in each design. “Our 60-member design team across India in Bangalore, Kolkata and Mumbai sits with customers, understands trends, and creates products without ignoring the traditional side of the jewellery industry. Customers still want gold jewellery and we need to create differentiation without taking it away from investment motive, which unfortunately is a strong reason to buy jewellery today in India.”
Suvankar Sen, executive director, Senco Gold & Diamond, added, “Our market research has shown that women today are buying jewellery for design. We underplay the effort taken to make handcrafted jewellery. We give so much time and effort to making a piece of jewellery but we don’t market it well.”
Jewellery historian Usha Balakrishnan gave an impassioned speech on India’s 5,000-year jewellery heritage, recalling a time when the country was the gem bazaar of the world and the Made in India tag was known all over.
Balakrishnan said, “The world loves old Indian jewellery, but sadly the greatest promotion of antique Indian craftsmanship and jewellery happens outside India. We don’t have a single gem and jewellery museum in India even though we have been the soul and heart of the gem and jewellery industry of the world for 5,000 years.
“Our greatest collections are lying in storage, they are not taken around the world and people in India itself are not allowed to see these collections. I hope these things act as a catalyst for the government for people in the industry to be conscious of our heritage.
“Unlike the great jewellers of the West such as Cartier, Tiffany or Van Cleef & Arpels where there’s an amazing amount of documentation, if you go to any old Indian company one of the big problems is that they don’t record the history of their families, share old designs or records. Except for a few exceptions, we don’t have the pride in our heritage that everybody in the West has.
“Historically speaking the karigars were the designers; there was no separate function as a designer because the karigar knew his material, gemstones, how to work with metal, and he was the greatest designer. Today, design has become a separate profession and anybody who draws professes to be a designer. That’s the sad part where India is not being able to leverage itself into the world market, and where we are falling short. As a historian, from a 5,000-year perspective, I hope I’m able to convey that design is the crux. Design, craftsmanship, and Made in India – the handcraftsmanship label that commands such a premium with other products in the world – that’s where India needs to position itself.
“Design is a separate area which requires an amazing amount of expertise; people have to know the material and how to manipulate it, etc. And I think we should all give recognition to designers and of course the karigars who transform the design into a living reality, a great piece of jewellery,” she concluded.
Neelesh Hundekari, partner, Asia Pacific, A.T. Kearney, said, “How to grow the pie is the collective challenge for India. The jewellery industry needs to appeal to the new consumers and invest more in marketing built around newer themes. I believe product innovation will be key.
“In order to catapult India as ‘jeweller to the world’, jewellery manufacturing will have to be strengthened. We need to produce innovative jewellery, perhaps experiment with new materials such as lower carat gold, silver, and coloured stones. The use of the latest manufacturing technology for creating jewellery in sophisticated and intricate designs will require a skilled workforce that is trained and certified and able to create higher quality products in line with global standards.”
Finance
P.N. Prasad, chief general manager, SBI, said, “When the lender looks at taking exposure in the gold industry, the two big issues are the lack of standards affecting integrity and the lack of price transparency in a product. Over the last 4-5 years SBI’s exposure to the gold and jewellery sector has fallen. This has to do with falling consumption levels or may be because of some of the restrictions which have come into the picture. We have also seen an increased level of impairment in this sector; previously this wasn’t the case.
“We work with a very thin majority in this sector, but if there is an impairment and stress happening, it wipes away all the profit and creates a negative impression that the sector has to be avoided. The gold sector has a lot of unorganised players who are out of the scope for finance. But following the introduction of GST, when they come to the mainstream, it will throw out more systematic data about turnover, values, etc., and will facilitate financing.
Prasad also spoke about the availability of a proper insurance or guarantee facility, and informed that the ECGC, for its own reasons, was not extending additional credit for a long time. “They have some costly policies, which put much more difficulty on an exporter.” He added that internally the SBI was working on some policies that could help ease the extension of finance to this sector.
Sunil Kashyap, managing director, head of Asia Pacific, ScotiaMocatta, added, “When we look at India, one of the challenges that is clear is the view that the government has towards gold and the gold industry.” He pointed out a contradiction, stating that on the one hand the government is very clearly discouraging imports of gold by raising duties. At the same time, the government wants to encourage exports of gold jewellery.
“From a banker’s point of view, it’s confusing. Do you want to encourage the industry or discourage it? When it comes to financing, the RBI rules are very clear; they don’t encourage you to lend against gold, or to lend for gold purchases. They explicitly say that they don’t want the banks to lend money to buy gold. That’s why it’s important to have one regulator, then they can look at the whole issue as one.”
Vinod Hayagriv, managing director & director, CKC Group of Companies, added, “How can we be low-cost to the consumers, but adequately pay our creators, whether it is a designer or craftsman? This is what the best companies in the world do; they bring the consumer cost low, but bring about a good, healthy profitability. We need to give our workers a platform of respect and give them a great deal of pride – only then will you have the next generation coming in.”
Standards & code of conduct
It was generally agreed that for India to compete on an international stage, the industry would need to work to internationally accepted standards. Without those standards and product quality, brand India will not succeed. The panellists said the industry would have to work on common ISO standards, LBMA good delivery, and increasing independence and integrity throughout the entire supply chain in order to build trust and confidence which is lacking.
Pasricha, head (hallmarking), Bureau of Indian Standards (BIS), informed that as far as gold jewellery is concerned, the new BIS Act has come into effect from October 12th 2017 and the hallmarking regulations are almost in the final stage of approval by the government. Once approved, the complete implementation as per the Act will be put in place, he noted, adding, “The Act has an enabling provision to make hallmarking of gold and silver mandatory, if the central government takes a decision. The Act also has a provision to compensate the consumer for any shortfall in the purity and there are panel provisions for violations. If a person misuses any standard mark or hallmark without having a valid licence, or there is misuse by a centre, they are all punishable, including imprisonment.”
On a lighter note, Doug Henry, CEO and assay master, Birmingham Assay Office, joked that “the penalty for messing with the king’s gold in 1300 was castration; penalties in India aren’t so severe. Things have moved on a little bit.”
Going forward, Pasricha warned of operational challenges in terms of the monitoring mechanism should all of India’s 3-4 lakh jewellers be brought into the BIS fold. “For the jeweller, it is critical that we ensure the identification and traceability of each piece of jewellery to an assaying and hallmarking centre. We already have more than 500 hallmarking centres in the country. Normally, in European countries there are three or four; so the jewellery is easily identifiable by symbols. And the way we are going, the country may need more centres. So identifying only through symbols has become difficult and we are thinking about how to go about establishing true identification and traceability.”
We need to give our workers a platform of respect and give them a great deal of pride – only then will you have the next generation coming in.”
Clean gold
The topic of responsible gold dore sourcing raised issues of quality and conformity, which the experts felt had a knock-on effect on the quality of gold used in jewellery.
Rajesh Khosla, managing director, MMTC-PAMP, said the lack of quality and conformity is holding the Indian gold sector back. According to him, the code of conduct that assures the right gold purity needs to look at three aspects: raw material sourcing and the host of international compliances, standardisation of a gold bar, and the assaying and hallmarking of the gold content in the jewellery manufactured.
Shakila Mirza, general counsel, LBMA, advised, “Responsible sourcing is no longer just about technical standards about purity of the gold in a bar, it’s just as important to know where that gold is coming from. The electronics companies use a very small percentage of gold and yet they make it a top priority to know where that small quantity of gold is coming from. Policy, implementation, enforcement and governance are all key ingredients in a successful programme.”
Tyler Gillard, head of sector projects, OECD Responsible Business Conduct Unit, added, “For India, we would advocate strongly for a phased-in approach that is coupled with strong capacity-building, training, and incentives for uptake. Because this is going to take some costs and we would support the government and industry to develop incentives to help offset those costs. So progressive improvement, slowly working with your suppliers to get more information is a key aspect. Using industry associations and leveraging collaboration could help reduce costs a lot. The GJEPC’s MyKYC Knowledge Centre takes a similar approach of sharing information on KYC risk assessments and makes it available to everybody in order to reduce the cost.”
Gillard commented, “India needs to use international benchmarks, which will support mutual recognition globally, it will attract the commercial interests you need in terms of banking, it will help refiners get customers that can trust them. The benchmark should be the OECD due diligence guidance on which the DMCC, LBMA and RJC are based, as it provides a unifying framework but that allows it to be adapted to the Indian context.”
David Bouffard, vice president of corporate affairs, Signet Jewellers, said, “I believe that is an opportunity for India, particularly the domestic market, to understand how to adopt something that is already existing and working to prevent further government intervention. We know that the Indian export market is already adopting an international code of practices; we have partnered with them for seven years on four different protocols.”
K. Srinivasan, convener JPC, GJEPC, said, “I strongly believe that the summit which brought together all stakeholders of the industry on a common platform would evolve a comprehensive gold policy under one authority. The policy will also ensure transparency and trust among key stakeholders including consumers.”
The two-day conclave ended with an open house where representatives of different regional associations presented their points of view on the discussions and the concrete steps that could be taken, with the discussion being guided by representatives of GJEPC, GJF and other trade bodies. A general opinion was that the conference would provide a new thrust to the industry at the local as well as at the all-India level.
India Gold & Jewellery Summit had a host of associations/brands supporting the event, including World Gold Council as Lead Partner; PC Jeweller as Powered by Partner; MMTC-PMAP as Refinery Partner; MCX as Partner Exchange; It’s My Name (PP Jewellers & Diamonds) as Hospitality Partner; DIL as Bullion Partner; Sequel as Logistics Partner; Fischer, Scotiabank, and Edelweiss as Industry Partners; DMCC, GJF, India Bullion and Jewellers Association, Bullion Federation as Supporting Trade Bodies; Thomson Reuters, IIM, and India Gold Policy Centre as Research Partners.