By RAJESH ROY And BIMAN MUKHERJI
NEW DELHI -- Jewelry buyers across India may soon be able to get a guarantee of the quality of the gold they're paying for, with the federal cabinet approving an amendment to a law which could lead to compulsory hallmarking.
The amendment has to be ratified by parliament before it becomes law. "This will take at least seven to eight months," a top government official said Wednesday.
The move is significant in that jewelry accounts for 80% of gold sales in India, the world's largest consumer of the precious metal. India's gold demand in 2011 was estimated to be around 960 tons by the World Gold Council.
Government officials say traditional handcrafted pieces, with their many joints and alloys used for soldering, leave room for dubious claims on caratage. Currently, hallmarking of gold jewelry is optional for retailers.
Implementing the law could prove to be tough as much of India's jewelry is handmade and fashioned in small workshops, often using blowpipes and candles or oil flames.
Also, although even the smallest of towns have at least one jewelry shop, hallmarking centers so far exist only in the bigger cities, said Dinesh Jain, director of the All India Gems and Jewellery Trade Federation.
"We support hallmarking, and we want it to be made mandatory," he said. "But they have not given us a copy of the draft [law], so we really don't know what is there in it."
In the absence of compulsory hallmarking, even some leading gold jewelry retailers opt out of hallmarking, relying on their brand name alone to win customers' trust.
But it isn't unusual for a customer buying gold jewelry labelled 22 carats to find out that it was only 18 carats when trying to sell or exchange it.
Mr. Jain said his federation, which represents the local jewelry industry, had asked the government to allow even trade bodies to hallmark gold jewelry besides state-run centres to simplify the task. "Hallmarking shouldn't lead to a licence [regime], riddled with red tape."
Gold jewelry can now be certified for purity only at government centres.
The government tried to introduce such a law about three years ago, but deferred the proposal as it didn't have adequate number of hallmarking centers for certifying the jewelry. The number of centers are still around the same.
JANUARY 4, 2012, 4:17 A.M. ET Read more: http://online.wsj.com/article/SB10001424052970203513604577139841630893810.html?mod=googlenews_wsj
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