Consumer Protection on Gold in India

Dr (Mrs) Sneh Bhatla, Director, Central Marks, Bureau of Indian Standards

The Bureau of Indian Standards launched its hallmarking scheme for gold jewellery three years ago. As most of you know, in India there is a great fascination with gold jewellery. It is given in the form of gifts during all the intimate family occasions in India, be they weddings, the birth of a child or wedding anniversaries. Until the late 1980s gold jewellery was only purchased from traditional jewellers from those jewellers that would also have sold jewellery to the forefathers, grandparents or parents of many Indians. After the Gold Control Act was abolished in the early 1990s, a lot of jewellers mushroomed in various parts of the country. The younger generation came up with the idea of purchasing different brands and different designs of jewellery, which were available from these new jewellers. Since the price of gold was fixed, these new gold jewellers tried to compromise on the purity of the jewellery. This came to the attention of the Ministry of Consumer Affairs in the late 1990s, which was concerned about the lower purity of gold jewellery being sold in the Indian market under the guise of higher caratage gold. At that time, the standing committee on gold and precious metals at the Reserve Bank of India decided that an organisation with the relevant infrastructure and competence should monitor and control the purity of gold jewellery sold in India. As a result, in January 1999, the Bureau of Indian Standards (BIS) was designated as the sole agency to operate a hallmarking scheme for gold jewellery. The BIS is the national standards body of India and is also engaged in certification schemes such as product certification, quality system certification, environmental management certification, and occupational health and safety certification. In April 2000, the BIS launched its hallmarking scheme. The basic objectives of the scheme were consumer protection, to enhance exports, to improve the quality and purity of gold jewellery produced, and to monitor any loss to the economy due to improper caratage, be it under- or over-caratage. The BIS hallmarking scheme operates under the Bureau of Indian Standards Act, 1986. This scheme is voluntary in nature it was regarded as best to start this scheme only on a voluntary basis. The scheme is based on the quality management systems principles. Here, as for this scheme, jewellers get a license from the Bureau of Indian Standards to enable them to have their jewellery hallmarked at any of the BISrecognised hallmarking centres. The hallmarking centre is given permission to operate, based on criteria, which are in line with the international practices adopted by the International Convention on Marking of Precious Metals, the Vienna Convention. The main objective of aligning the BIS criteria with the criteria of the Vienna Convention was to enable the BIS to become a member of the Convention, after displaying adequate confidence in running hallmarking schemes in India. In the three years that the BIS has been running the hallmarking schemes, it now believes that it has gained enough confidence to apply to become a member of the Vienna Convention in the near future. It has already formulated Indian standards on gold and gold alloys, based on guaranteed licenses or certification given to jewellers, and the recognition given to hallmarking centres. These Indian standards are: IS 1417, the standard on gold and gold alloys; IS 1418, covering the assaying of gold in bullion, gold alloys and gold jewellery; IS 2790, which gives guidelines for the manufacture of different types of gold alloys; and finally, IS 3095, which specifies the solders, types of solders and the guidelines to manufacture solders for jewellery. As for this scheme, the BIS certifies the jewellers under the product certification scheme of the BIS, that is, as per IS 1417.

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The testing by the hallmarking centres is done as per IS 1418, which is aligned with the international standard, with no deviations from that standard. The Indian hallmark consists of five marks. The first mark is the standard mark, which is very similar to the BIS corporate logo. The second mark, which is put on the hallmarked jewellery by the hallmarking centres, is the fineness mark, 916. Purity can be marked for different finenesses, such as 916 for 22 carat, 750 for 18 carat, or, in the case of lower caratages, theres a provision in the standard to mark six caratages, starting from 23 carat to 9 carat. The third mark, which is one of the components of the hallmark, is the assaying and hallmarking centres logo. The fourth mark is the jewellers logo, and the last one is the year of marking, which is denoted by a letter. When the scheme started in 2000, the mark used was A, 2001 was B, 2002 was C and for 2003, the letter D is being used. Once a jeweller is certified, they have certain obligations. They must ensure the homogeneity of the jewellery, which they receive, from the designer. In addition, they must ensure the homogeneity of the purity of the lot, which they offer to the hallmarking centres for hallmarking purposes. Certified jewellers must maintain certain quality control checks on this jewellery. Each certified jeweller can get their jewellery hallmarked from any of the BIS recognised hallmarking centres. There are 11 hallmarking centres in the country at present. It is obligatory on the part of the certified jeweller to submit the jewellery with the jewellers logo and year of marking. Jewellery can be submitted either in finished or semi-finished form, and polishing, if required, can be done at a later date. There is one mandatory requirement for all the certified jewellers, aimed at improving consumer awareness and to educate the consumer the display requirement. All BIS certified jewellers have to adhere to the display requirement which means that they have to have some display board, where the consumer can see that hallmarked jewellery is available in the store. This must be written on the board, along with the BIS license number. Hallmarked jewellery must be differentiated through special counter tags or labels. Because hallmarking is not mandatory, the BIS-certified jeweller does not have to hallmark its entire stock of jewellery in one go. Gradually, the jeweller can convert his stock into hallmarked jewellery, but it is his responsibility to differentiate hallmarked jewellery from nonhallmarked jewellery. To educate the consumer, the jeweller has to show in the display requirement, how the hallmarked jewellery is distinguished from non-hallmarked jewellery. This may be achieved by having a special counter, or hallmarked jewellery can be differentiated by using different colours. Again, it is obligatory for the jewellers to illustrate the hallmark components to educate the common consumer because todays consumer is not aware of what exactly the hallmark components are, or what they should look for. Indian consumers have become familiar with caratage, but they are less knowledgeable about the metals fineness, although, as per international practices, fineness is marked on the jewellery and not the caratage. The BIS has made it mandatory that the certified jewellers display the equivalence of each caratage to help the consumer. Jewellers must make a magnifying glass available because the size of the hallmark is so small that it cannot be seen with the naked eye. The two permissible sizes used by Indias hallmarking centres are 0.5 mm and 1mm only. Although, as per international practices, two more sizes, 0.75mm and 1.5mm, should now be available at the hallmarking centres. Finally, under the display requirements, the name and address of the jewellers selling hallmarked jewellery are required. In the hallmarking scheme there are three main players: the BIS, the jeweller and the hallmarking centres. The BIS gives licences to the jewellers, who can get the jewellery hallmarked at the BIS-recognised hallmarking centres. The pre-requisite for a laboratory or an organisation to get recognition from the BIS to set up hallmarking centres is that the applicants have to have an independent legal identity. The operators of the hallmarking centres must not have any links with the jewellery trade, whether retailing or manufacturing. The centre must be capable of implementing a quality management system. The centres have to have complete test facilities as per IS-1418, which is the same as is found in the ISO standard, and they must have trained and competent manpower. They also must have adequate sampling and hallmarking tools; they have to have adequate security and safety arrangements; and they must be

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able to hallmark jewellery within a given time-frame, which the BIS has specified in its criteria, as 48 hours. All these requirements are quite similar to those demanded by international criteria. If an organisation fulfils all the above requirements, only then will the BIS consider an application to qualify as a hallmarking centre. Further, the BIS assesses an applicants competence, complete testing facilities, safety and security measures, and the quality management system implemented. Only then will the BIS grant the necessary recognition to become a hallmarking centre. Once recognition is given to the hallmarking centre, it has to observe certain obligations. It has to maintain funds confidentiality and provide service to all the BIS certified jewellers. The centre has to participate in proficiency testing and inter-laboratory testing programmes to promote confidence in the test results. It has to communicate any changes in the equipment or in personnel to the BIS, and must implement BIS-approved sampling plans and hallmarking charges. Centres have to follow BIS directives from time-to-time.
PROCEDURE FOR HALLMARKING
BIS Certified Jeweller Return to Jeweller
Jewellery

BIS Recognized A&H Centre 100% Check of homogeneity Satisfactory Draw min. 10% sample from lot

Unsatisfactory

Reject or downgrade

Fail

Fail Retest 3 times Pass to confirm

Fire Assay Test Pass Hallmarking

Regarding the procedure of hallmarking, any BIS-certified jeweller who intends to hallmark jewellery can come to any of the BIS-recognised hallmarking centres. The hallmarking centre checks the homogeneity of the lot by testing each and every article. If a lot is found not to be homogeneous, it is returned to the jeweller with the request to segregate the lot into articles of uniform purity. Where the lot is homogeneous, then a minimum 10% of samples are drawn from that particular lot, and a sample is taken from that 10% to make one composite sample, which is tested by the fire assay method. Once the sample has been passed, the whole lot is hallmarked. In case a sample fails, it is retested three times and, again, if it does not reach the declared purity, it is returned to the jeweller, either with a reject mark or downgraded. The BIS maintains surveillance on the certified jewellers, on the hallmarking centres, as well as on the market. Periodic surveillance is done by the BIS through audits on the operations of the certified jewellers, as well as the hallmarking centres. Usually about twice yearly, BIS officers visit certified jewellers to verify that they are implementing quality control procedures on jewellery when they are sending it for hallmarking. Samples are picked up from the jewellery showrooms and are tested to review the performance of the certified jewellers. Hallmarking centres are visited two to three times a year to verify the implementation of the documented system. The BIS also checks the hallmark samples available in the open market and sends it to different hallmarking centres to re-verify the purity as marked on it. Based on this surveillance, the BIS allows the hallmarking centres to continue marking. If necessary, it will request centres to stop marking, which can happen if the purity is lower than that marked on the jewellery. An investigation is immediately launched to determine the reason for the discrepancy. Corrective action is taken and only then can the centre restart hallmarking. The BIS standard does not permit any negative tolerance. Thus 916 means that 915.9, for instance, is not permitted. If results show 915.9 when a lot is hallmarked in a sample from the open market that we have tested, the BIS issues a warning letter to the hallmarking centre and, also, a letter to the jeweller to determine how this has happened and how it can be rectified. A hallmarking centre is also subject to BIS scrutiny and can be relieved of its duties by the BIS due to unsatisfactory performance and lack of integrity.
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Consumer Protection on Gold in India

Sneh Bhatla

Regarding the number of licences granted to jewellers to date, about 70 are in Delhi itself, out of a total of 93 for the central region of the country. In the northern region, including Haryana, Punjab and Himachal, 23 licences have been granted. In the eastern region of the country, 81 licences have been granted, mainly in West Bengal and Bihar, with a few in the northern states. In the southern region, 123 licences have been granted, essentially in Kerala and Andhra. The most licences have been granted in the western region, totalling 177. The majority of these are located in Maharashtra and Gujarat.
Hallmarking Centres recognised MMTC, New Delhi Micro A&H Centre, New Delhi Chemnanur Gold Refinery Pvt. Ltd., Cochin Gujarat Gold Centre, Ahemdabad Geekay Exim, Mumbai Emerald Testings (India) Pvt. Ltd., Coimbatore Leo Analytics Lab, Mumbai Jalan & Co., New Delhi Calicut A&H Centre, Calicut Bharat Assayers, Chennai J.J. Hallmarking Centre,Kolkata

The number of hallmarking centres in India to date is 11. Out of this total, three hallmarking centres are operating in Delhi, two in Mumbai, four in the southern part of the country three in Kerala and one in Chennai and there are three in the western part of the country, of which two are in Bombay and one in Gujarat. And finally, there is one centre operating in the eastern part of the country, in Calcutta. Looking at the number of items hallmarked, its worth noting that some of the centres came into operation only one or two years ago when the scheme began there were four or five centres. In the state of Gujarat, 2 lakhs and 83 thousand articles were hallmarked by the Gujarat Gold Centre in Ahmedabad, the leading centre, followed by Mumbai. In Bombay, there are two centres, Geekay Exim and Leo Analytics Lab, and these combined represent a total of two lakhs and 72 thousand hallmarked articles. Aside from the 11 registered centres, there are four more centres being planned. Two of these are in Mumbai, one in Calcutta, and one in Trichur in the state of Kerala.

Gold Jewellery Articles Hallmarked

300,000 250,000 200,000 150,000 100,000 50,000
0 Mar00 Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec00 00 01 02 00 01 01 01 02 02 02

The number of items hallmarked is on the increase, and BIS expects this increase to continue. Although the hallmarking scheme is progressing well, the BIS believes that consumer awareness levels can be greatly improved and that a lot of publicity and promotion of the hallmarking scheme is still required. Today, the promotion and publicity being carried out by the BIS is being done in a limited fashion due to a lack of available funds from the government. Good progress could be made, however, if the jewellery trade, the BIS and the banks could work together on the project.
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