scorecardresearch
Here's how Hallmark Unique ID will revolutionise gold trade

Here's how Hallmark Unique ID will revolutionise gold trade

Earlier, ornaments had BIS logo, purity mark, and identity mark of the seller and imprints of the hallmarking centre. Now, a new six-digit alpha-numeric code is ensured with BIS logo.

Usually, certain amount of silver and bronze are used in the manufacturing to make gold ornaments stronger. Usually, certain amount of silver and bronze are used in the manufacturing to make gold ornaments stronger.

There is no doubt that the new initiative of BIS Hallmarking and the Hallmark Unique ID (HUID) to protect the consumers, made mandatory from June 16 this year, will usher in constructive changes in the industry. HUID will insulate the consumers from the illicit and unhealthy trade practices, while making the gold industry more transparent and progressive.

Bureau of Indian Standards (BIS) proposed the hallmarking of jewelleries in 2000, but it was not made mandatory by the government till June this year.

Usually, certain amount of silver and bronze are used in the manufacturing to make gold ornaments stronger. Hence it is important to ensure the purity of gold in the interest of the consumers. Thus 22-carat ornaments have 91.6 per cent pure gold and it is branded as 916 jewelleries. If it is 18 carat, 75 per cent of pure gold should be ensured and BIS hallmarking thus protects the basic right of the consumer to own pure gold. It has two benefits. First, this ensures the best price while selling and exchanging the old ornaments. Secondly, it gives a legal protection to the trade, while curbing the illicit trade.

Let's see more about HUID. Earlier, ornaments had BIS logo, purity mark, and identity mark of the seller and imprints of the hallmarking centre. Now, a new six-digit alpha-numeric code is ensured with BIS logo. We can identify the seller, purity and the name of the hallmarking centre through this code, which is linked to the database of the BIS. Through the website or the BIS app, one can check this information, thus making the trade more transparent. This initiative will also eliminate the practice of running illegal hallmarking centres.

Government has made BIS hallmarking mandatory from June 16 and 256 districts have been included in the first phase. All districts, except Idukki, in Kerala are included in this phase. Kerala has sufficient number of hallmarking centres (73) and they are yet to be utilised to the full potential.

Also Read: Govt likely to absolve Air India bidders from Cairn lawsuit liabilities

The Centre has exempted only a few from the purview of this hallmarking. Firstly, the small jewellers with an annual turnover below Rs 40 lakh are exempted. Secondly, the jewelleries meant for international exhibitions are also exempted. Besides, certain ornaments weighing below 2gm are also out of the purview of this system.

This means that hallmarking is compulsory on almost all kinds of ornaments sold in the shops. This will ultimately help the traders win the confidence of the consumers and forge stronger relations with them. Overall, this will help the industry as a whole in a big way.

Currently, there are many pitfalls in the trade. One is the trading of substandard gold ornaments, as consumers cannot check the quality on their own. The new initiative will make the trade more organised by weeding out unhealthy practices, while promoting the legal business. It will also ensure more acceptance to Indian ornaments in the global market. Jewellers have pointed out the lack of enough hallmarking centres to meet the demand as a shortcoming of this initiative. However, it is not a hard task to strengthen the network of centres.

Currently, there are 955 BIS-approved centres and there are already 405 applications pending for new centres. The insufficient number of centres may have prompted the government to introduce the system only in 256 districts, out of the total 741 districts in the country.  According to BIS data, 800 metric tonnes of gold is used every year in the country and 80 per cent of the same is used for making ornaments for the domestic market.

Though hallmarking was suggested in 2000, only 30 per cent of the jewellers have so far adhered to this practice. It took 21 years to implement this initiative, as every new reform runs into many hurdles. Such a progressive and consumer-oriented reform should not have been put on hold for such a long period due to some minor discrepancies. Mandatory hallmarking will obviously check the illegal trade as it plugs in many loopholes of the system. It is a win-win reform for the government and the consumers, as it will check the illegal trade and protect the rights of the consumers.

A small section of jewellers is still opposing this move, but their arguments are not logical. Let's hope that they will soon realise the merits of this initiative and support it.

The illicit trade and smuggling of gold help only the international mafia groups earn more. Both the government and the consumers are the ultimate losers. Government does not get the tax and the consumer rights are not protected. We should take every step to ensure 'responsible sourcing' in letter and spirit. The entire process right from mining to the purchase of ornaments by the consumers should be made transparent and fool-proof. We should believe in the motto of 'Make in India and Market in the Global market', which is ultimately good for our economy and industry.

(The author is chairman of Malabar Gold & Diamonds.)

Also Read: GST revenue collection for Aug touches Rs 1,12,020 crore