Indian gold jewellery exports could triple if new standards implemented – WGC

Otmane El Rhazi from The Bullion Desk.

[Embargo 7am 30th July] 

Improving Indian hallmarking standards could bolster Indian gold jewellery exports by 400 percent, according to the World Gold Council.

Artisanal Indian jewellery is widely recognised for its intricacy and craftsmanship, but concerns over the purity or quality of Indian gold has long held back the potential of this market on an international scale, according to a new report from the WGC.

India currently exports around $8 billion of gold jewellery, equivalent to just eight percent of global gold demand.  But the council said that exports could triple to $40 billion if international purchasers felt able to place their trust in Indian gold.

“This has significant potential to increase if quality control is addressed,” it said in its report.

Indian jewellery has suffered from under-caratages for some time, despite attempts from authorities to remedy the situation through the establishment of the Bureau of Indian Standards (BIS).

But gold jewellery in India is still affected by under-caratages of anywhere from 10 to 15 percent on average.

“This means that, when a consumer purchases an item of jewellery and is told the gold content is worth 10,000 rupees, it is, on average worth 8,500 rupees to 9,000 rupees,” the World Gold Council said, “In other words, consumers are routinely cheated,” it added.

The resulting lack of trust has compromised the Indian gold export market, and made gold less acceptable as collateral for other productive uses, the report adds.

“The Indian gold market would reap extensive and much-needed benefits if it were supported by a fully functioning, credible and rigorous hallmarking system,” it said.

To achieve this, the World Gold Council outlines a number of steps to improve the efficiency of the system.

It suggests that governance around the hallmarking processes needs to be strengthened, and that consumers need to be made more aware of the concept of hallmarking.

As such, there should be incentives for the expansion of hallmarking centres, the report adds.

Further, it suggests utilising current BIS data to develop a ratings system for jewellers. The Indian gold industry is largely made up of small, artisanal outlets that often operate without licence or accreditation.

Additionally, the report suggests that the government should pilot a BIS Unique ID scheme or other technological solutions to support hallmarking, while also pursuing membership of the International Hallmarking Convention, or perhaps develop a regional alternative.

Longer term, it also suggests both moving to a mandatory hallmarking regime and placing the onus of hallmarking on the manufacturers.

Under a new system, under-caratages would be reduced to the benefit of Indian consumers, and trust in gold as collateral would be enhanced, thus making gold more productive within the economy.

The resulting strength in the market would sustain growth in the jewellery sector and create significant employment opportunities.

Overall, we estimate that exports could increase to at least $40 billion from $8 billion in 2013 and up to 2.5 million jobs could be created by 2020, if local consumers, overseas buyers and financial markets could place their trust in the quality and purity of Indian gold,” it said.

“We further suggest that the Government’s gold monetisation scheme would be materially more effective and that consumers would, over time, appreciate the benefits of reliable, hallmarked gold,” it added.

 (Editing by Martin Hayes)

 

 

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