Traders welcome hallmarking gold jewellery move

Traders welcomed a move by the Indian government's move to make hallmarking of gold jewellery mandatory on expectations that it could boost demand in the world's largest consumer of the yellow metal by ensuring better quality standards.

The move proposed as a Bill, that will have to be passed by Parliament to change provisions in the Bureau of Indian Standards (BIS) Act, 1986, will allay fears about quality and drive more investment in the gold, Bombay Bullion Association President Prithviraj Kothari said.

"Gold prices are high. Customers paying a hefty price need to be assured of quality. Hallmarking can boost investment demand in jewellery form. Currently purity concerns deter many consumers from buying jewellery," Kothari was quoted as saying.

Jewellery maker Rajesh Exports said that if strictly enforced, the moved could save consumers from buying lower purity jewellery in the garb of 22 carats, wherein sometimes the consumers are cheated to an extent of more than 25 percent by delivering lower purity.

"This would not affect the business in any way, except in a positive way, wherein the customers trust on the jeweler will improve because of the guaranteed quality and purity," the company, that runs the retail jewellery chain Shubh Jewellers, said.

According to the company's estimates about 900 tons of jewellery is sold per year in India and in this there is a dilution of between 10 to 20 percent in purity, resulting in a value loss of about Rs. 35,000 crores per annum.

On Friday, a dip in Indian gold prices, backed by a strengthening rupee, prompted jewellers to restock ahead of the upcoming wedding season. The most-active February gold was down 0.32 percent at 27,762 rupees per 10 grams at 3:36 p.m. on the Multi Commodity Exchange.