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In India, The Ban on the Sale of Gold Jewellery without a Hallmark from April 1, 2023

The Government of India has made this move to regulate the quality of gold being sold in the market and safeguard the interests of consumers; starting from April 1, 2023, gold jewellery without hallmarking cannot be sold in India.

Hallmarking is a process through which the purity of gold is verified and certified by an independent agency, such as the Bureau of Indian Standards (BIS). The hallmarking process involves assaying the purity of gold in a sample and stamping it with a unique hallmark^[1] indicating the purity level. The hallmarking process also verifies other aspects of the jewellery, such as the material’s weight and authenticity.

Introducing this new rule is expected to have a remarkable impact on the jewellery market in India. Gold is an integral part of Indian culture and tradition and is often used in religious ceremonies, weddings, and other important events. According to industry estimates, the Indian gold jewellery market is worth over Rs. 3.5 lakh crore, and the new rule is expected to bring greater market transparency and accountability.

Advantages

• The new rule is expected to benefit consumers in several ways. First and foremost, it will provide consumers with a guarantee of the quality of the gold jewellery they are buying. Consumers can verify the purity of the gold they purchase and ensure they get their worth. It will help prevent the sale of sub-standard or fake gold, a common market problem.
• Secondly, the new rule is expected to help reduce the incidence of gold fraud in the market. Gold fraud is a significant problem in India, with many people falling victim to scams and fraudulent schemes. With hallmarking becoming mandatory, it will be more difficult for fraudsters to sell fake or sub-standard jewellery to unsuspecting customers.
• Thirdly, the new rule is expected to help increase the demand for high-quality jewellery. With hallmarking becoming mandatory, consumers will be more inclined to buy gold certified for its quality and purity. It will help promote the growth of the organised sector in the gold market, which unorganised players currently dominate.

Disadvantages

• However, the new rule is also expected to impact the market negatively. One of the biggest concerns is that it may lead to a temporary shortage of gold in the market, as many retailers may need more stocks of hallmarked jewellery to meet the demand. It may cause prices to rise temporarily as demand outstrips supply.
• Another concern is that the new rule may increase the price of gold, as the cost of hallmarking will be passed on to the consumers. Hallmarking is costly, and retailers are expected to charge a premium for hallmarked jewellery to cover the additional costs.
• There are also concerns that the new rule may reduce the demand for gold in the short term, as consumers may be hesitant to buy hallmarked jewellery due to the higher prices. It may have an adverse impact on the livelihoods of many people involved in the jewellery industry, including manufacturers, retailers, and artisans.

How to tackle this problem:

While the rule is expected to bring greater transparency and accountability to the market, it may also lead to problems, such as a temporary shortage of gold jewellery and an increase in prices. Here are some ways to tackle these problems:

• Increase awareness: One of the key ways to tackle the problems associated with the new rule is to increase awareness among consumers. The government, industry players, and certification agencies can launch campaigns to educate consumers about the benefits of hallmarking and the importance of buying high-quality gold. This can help create a demand for hallmarked jewellery and reduce the new rule’s impact on the market.
• Increase production: To ensure fine gold, manufacturers and retailers can increase their production of hallmarked jewellery. This can be done by investing in the infrastructure and technology required for hallmarking and partnering with certification agencies to ensure their jewellery meets the required standards. This can help meet the demand for hallmarked jewellery and prevent a shortage in the market.
• Manage prices: To avoid an increase in the price of gold, manufacturers and retailers can explore ways to manage their costs. This can include optimising their supply chain, reducing wastage, and improving their manufacturing processes. They can offer discounts and promotions to encourage consumers to buy hallmarked jewellery. This can help keep the prices of hallmarked jewellery competitive and reduce the new rule’s impact on consumers.
• Support: The government can support small and medium-sized jewellery manufacturers and retailers to help them comply with the new rule. This can include financial assistance, training, and technical support to help them invest in the infrastructure and technology required for hallmarking. This can help reduce the new rule’s impact on small and medium-sized players in the market.
• Ensure compliance: Certification agencies and the government can ensure compliance with the new rule by conducting regular inspections and audits. They can also impose penalties on manufacturers and retailers who do not comply with the rule. This can help ensure that only hallmarked jewellery is sold in the market and prevent the sale of sub-standard or fake gold.

The Government must ensure sufficient infrastructure to support the hallmarking process, including assaying centres and certification agencies. The government must also support small and medium-sized jewellery manufacturers and retailers to help them comply with the new rule. Industry players must also educate consumers about the benefits of hallmarking and the importance of buying high-quality gold jewellery. Retailers will need to ensure that they have sufficient stocks of hallmarked jewellery to meet the consumers’ demand.

Conclusion

In conclusion, the new rule that gold jewellery without hallmarking cannot be sold from April 1, 2023, is a step towards regulating the quality of gold jewellery sold in the market and protecting the interests of consumers. While it may lead to some initial challenges, such as a temporary shortage of gold jewellery and an increase in prices, these can be addressed through measures such as increasing awareness, increasing production, managing prices, providing support, and ensuring compliance. Implementing the hallmarking rule is expected to bring greater transparency and accountability to the market and ensure consumers have access to high-quality hallmarked jewellery. By working together, the government, industry players, and certification agencies can ensure that implementing the hallmarking rule is a success and that the market remains sustainable and competitive in the long run.

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