India’s love for gold, especially in the form of jewellery, is widely known. However, the process of converting raw gold into jewellery involves alloying it with other metals, making consumers vulnerable to potential adulteration. Consumers have long been aware of this issue, but their only option has been to trust the words of jewellers.
To address this concern and instill trust among consumers, the Reserve Bank of India (RBI) Standing Committee on Gold and Precious Metals designated the Bureau of Indian Standards (BIS) as the sole agency responsible for implementing the Hallmarking Scheme in India in 2000. The hallmarking scheme aimed to protect consumers from cheating, enhance export competitiveness, and establish India as a leading global market for gold jewellery.
Fast forward to 2018, when the Central Government, through a notification, mandated the hallmarking of gold jewellery and gold artefacts. The Bureau of Indian Standards Act granted the government the authority to issue this notification, which paved the way for the Hallmarking of Gold Jewellery and Gold Artefacts Order, 2020. According to this order, gold jewellery mentioned in the 2018 notification could only be sold by registered jewellers through certified sales outlets. The jewellery had to conform to specified standards and bear a hallmark under a certificate.
The 2020 Order underwent amendments over time, and jewellers in 288 specifically notified districts were required to comply with its provisions. These districts were selected deliberately in a phased manner due to the lack of hallmarking centres and proper testing facilities for gold jewellery.
It is worth noting that the 2020 Order does not apply to jewellers in “Free Districts.” Consequently, these jewellers can continue selling unhallmarked jewellery as they are exempt from the order’s requirements. However, a question arises: Can a jeweller from a Free District purchase hallmark jewellery from a jeweller in a notified district for further sale?
When it comes to buying hallmark jewellery, there seems to be no issue as anyone can make the purchase. However, the challenge arises when jewellers from Free Districts intend to sell such hallmark jewellery without complying with the 2020 Order.
According to Regulation 3(1) of the BIS (Hallmark) Regulations, a jeweller must apply for a certificate of registration to sell precious metal articles covered under the BIS Act. BIS Authorities interpret this regulation strictly, requiring jewellers from Free Districts to register under the BIS (Hallmarking) Regulations to sell already purchased hallmark jewellery. In essence, this becomes an indirect compliance with the 2020 Order. This situation creates a classic Catch-22 scenario: Free Districts are excluded from the order due to the lack of proper hallmarking and testing institutions. However, if jewellers from Free Districts wish to sell hallmark jewellery and support the government’s intention, they are compelled to register under the BIS (Hallmarking) Regulations.
Such a strict interpretation may contradict the application clause of the 2020 Order and undermine the purpose of distinguishing between notified and Free Districts and the phased implementation of the mandatory hallmarking scheme. To address this anomaly, relevant industry associations should make suitable representations, seeking exceptions in the 2020 Order. Jewellers from Free Districts, lacking proper hallmarking and testing facilities, should not be penalized or forced to undergo the hardships of BIS registration for the sale of hallmark jewellery. Without modifications or changes, the current situation risks creating unnecessary difficulties for jewellers operating in Free Districts.
As the gold jewellery industry grapples with these challenges, it remains to be seen how stakeholders and regulatory authorities will work together to find a balanced solution that ensures consumer protection, promotes fair trade practices, and supports the growth of the domestic gold jewellery market.