New Delhi: Gold jewellery exports could jump five-fold to USD 40 billion in the next five years if quality standards are improved, the World Gold Council said Thursday.
Even gold jewellery that has Hallmark certification vary in purity, the council said, while calling for urgent steps to improve quality standards in India, the world's largest gold consuming nation.
India consumes 800-1000 tonnes of gold annually, of which almost entire quantity is imported.
Improvements in the hallmarking system in India are not only essential to a successful gold monetisation scheme but also help to boost the country's gold jewellery exports from the existing USD 8 billion to USD 40 billion in the next five years, the World Gold Council (WGC) said.
The hallmarking of gold, which is voluntary in nature at present, is a purity certification of the precious metal. The Bureau of Indian Standards (BIS), under the Consumer Affairs Ministry, is the administrative authority of hallmarking.
"Even though, 30 percent 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 percent," WGC said in a report.
Even hallmarked items vary widely in purity because of weak quality control and lack of resources on the part of BIS to enforce its policies, it said.
Though under-caratage in gold has reduced to 10-15 percent from 40 percent since the introduction of BIS hallmarking in 2000, but challenges still remain, it added.
WGC India Managing Director Somasundaram P R said: "Hallmarking is not mandatory and consumer awareness is limited so jewellers are neither obliged or incentivised to become certified. Moreover, hallmarked and non-hallmarked items are sold in same outlet."
He said that operationally, many hallmarking centres suffer from lower profitability, poor equipment and slack processes.
"Hallmarking centres need to operate at a minimum of 50 percent capacity just to break even at the BIS stipulated price of Rs 25 per piece. Many cannot achieve this target and so they resort to price cutting and malpractice."
"And from supervisory perspective, the BIS is not adequately staffed to fulfil is role effectively," he added.
According to the WGC report, 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.
India has approximately 220 BIS recognised assaying and hallmarking centres and maximum of them are located in Tamil Nadu (57), followed by Kerala (39). The distribution of these centres is uneven as South has 153 centres, the North has 111 and the West has 65, the report said.
Suggesting ways to strengthen hallmarking system in India WGC said, "The BIS would need substantial extra resource to be able to enforce its policies effectively, drive hallmarking across India and increase confidence in Indian hallmarked items nationally and overseas."
