India's gold industry is fretting about its ability to meet a deadline for compulsory hallmarking or certifying the caratage of jewellery, while consumers have embraced the government-initiated plan.
A fifth of the world's gold output is consumed in India. Jewellery accounts for 80 per cent of Indian sales, much of it handmade and fashioned in small workshops, often using mouth blowpipes and candle or oil flames.
Government officials say traditional handcrafted pieces, with their many joints and alloys used for soldering, leave room for dubious claims on caratage.
Gold jewellery can now be certified for purity at government centres, and a seven-year old hallmarking scheme will become mandatory from January 2008 -- but the industry says there are not enough assessors yet for the programme to work.
"It is like defining a speed limit, before even setting up the highway," said Ashok Minawalla, chairman of All India Gems and Jewellery Trade Federation. The trade is spread across the remotest parts."
A government survey in 16 cities last year found that out of 162 samples, 147 -- more than 90 per cent -- fell short in purity terms by between 13.4 per cent to 44.7 per cent.
That meant a customer who bought gold jewellery labelled 22 carats could find it was only 18 carats when trying to sell or exchange it.
There are 55 hallmarking centres authorised by the state-run Bureau of Indian Standards. Traders say that this will not be enough to cope with needs of 300,000 jewellers spread across cities, towns and villages, who have sales of Rs 700 billion annually.
A senior official in the Bureau of Indian Standards said 40 to 50 firms had shown interest in setting up hallmarking centres.
While the industry has its doubts, top jewellers say that the trend for wanting hallmarking certification has increased.
"Hallmarking has caught up quite nicely in Chennai," said Ranjit Rathod, owner of a jewellery unit, who estimated that nearly half of his sales are hallmarked jewellery.
Shrikant Zaveri, chairman of Tribhovandas Zaveri, one of India's most respected gold jewellery houses, said that a majority of customers in his shops ask for certification.
"Out of every 10 customers, six or seven people ask for it," he said.
Jewellers say that even small shops are opting for it, though the move has not made much headway in villages and small towns.
Minawalla, who noted that Mumbai has 10,000 jewellers, said that the scheme could work if it was first introduced in cities, and then moved to villages in phases.
"The confidence is not there in the trade that the government will be able to provide the kind of hallmarking they are looking for," he said.