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All about the New Gold Hallmarking Regulation, 2021

Two decades after gold hallmarking was introduced in India on a voluntary basis, there has been a reformation in the Indian gold jewellery segment. The Indian government formed new rules by which jewellery sellers are obliged to sell gold mandatorily with hallmark. 20, 23 and 24 carat gold will also be hallmarked from June 16, 2021. Certain exemptions and postponement of the date has been declared thereafter. 

The Bureau of Indian Standards (BIS) is the designated authority to implement hallmarking of gold jewellery. The reformation and introduction of this new rule is bent towards bringing about transparency in trade and boost the trust among consumers.

What is gold hallmarking?

Gold hallmarking is a purity certification of the precious metal. This is a quality certificate issued by the BIS guaranteeing the purity of gold in a certain piece of jewellery. The certificate is issued to all registered jewellers based on purity tests at certificated centers. 

Earlier, India was the only country that had a significant level of gold consumption but did not have hallmarking as a mandatory requirement for selling of gold even though BIS (Hallmarking) Regulations were introduced effective on June 14 , 2018.

Why is gold hallmarking necessary?

In order to cut down all the confusion  while buying jewellery and ensure authenticity, gold hallmarking is essential. For around 2 decades when hallmarking was voluntary, only 30% of gold jewellery used to be hallmarked. Gold is an expensive commodity which has seen prices around and above Rs. 50,000 per 10 gms. Therefore, it’s essential to build strong trust around this commodity. 

As per the government, hallmarking of jewellery/artifacts is essential in order to enhance the credibility of the business and ensure a secured sale process. It also contributes towards customer satisfaction through a third party assurance for the marked purity/fineness of gold. The government of India believes that this step would help develop India as a leading gold market centre among the different countries of the world. 

The hallmarking stamp which so far has four symbols ie. BIS logo, purity in carat (K) and fineness; the identification mark of the AHC and the jeweller’s stamp will have the last two stamps replaced by the six-digit alphanumeric HUID with which every article would have to be separately tagged. 

Jewellery below 2 gms has been exempted; as also jadau, kundan and polki jewellery techniques and designs. 

One can check the quality of gold jewellery on the BIS Care App by keying in the HUID.

What is HUID?

“HUID is like an Aadhar card or a property document,” says Ramesh Kalyanaraman, chairman and MD of Kalyan Jewellers, adding that organised players are likely to benefit more since they have already been hallmarking the jewellery. 

How to identify if you’re buying hallmarked gold?

While buying jewellery keep note of the following 4 points:

  1. BIS Mark
  2. Purity in carat and fineness (any one of the following)

24 K pure gold jewellery is too soft for everyday use. So it is mixed with an alloy to strengthen the jewellery and to enhance durability. The alloy is a mixture of metals like silver, copper, platinum, palladium, and zinc. 

K refers to the karat ie. content of gold. Karats represent how many parts, by weight, of pure gold are present in the 24 parts of the alloy. Below is the range of gold content:

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Purity or fineness scale in Gold

24 K = 99.9% Pure (European Marking Fineness 999) too soft for fine jewellery

22 K = 91.6% Pure (European Marking Fineness 916) is too soft to hold the precious gems securely

18 K = 75% Pure (European Marking Fineness 750) Ideal for fine jewellery

14 K = 58.5% Pure (European Marking Fineness 585) Ideal for fine jewellery

12K = 50% Pure (European Marking Fineness 500)

9 K = 37.5% Pure (European Marking Fineness 375)

* Fineness represents the purity of precious metals expressed in parts per thousand

In India, gold jewelry is made in 22Kt while diamond jewelry is usually 18 Kt. Jewelry in the US is usually made of 14kt and 9/10kt is normally sold. Hence it is important to understand the hallmark for authentication.

Note:

  • 22k916 – Equal to 22 carat
  • 18k750 – Equal to 18 carat
  • 14k585 – Equal to 14 carat
  • 20,23 & 24 carat also hallmarked now
  1. Identification mark or the Number of Hallmarking Center
  2. Identification mark or Number of the Jeweller

A report from the World Gold Council states that India has around 4 lakh jewellers out of which only 35879 have been BIS certified. Since only 30% of Indian Gold Jewellery was hallmarked, the mandatory regulations will further ensure authenticity and help consumers or jewellery buyers make the right choice!

The new gold hallmarking regulation will benefit the organised jewellers and larger brands. However, small and mid-sized jewellers are forced to quickly adapt to these regulations in order to stay competitive in this industry.

All that you must know about the New Hallmarking rules

  1. Gold hallmarking refers to the purity certification of the precious metal.
  2. From the 15th of June, 2021, jewellers will only be allowed to sell 14, 18, and 22 carats of gold jewellery and other artefacts. In case a jeweller is found selling any gold items without the BIS hallmark, they will be subjected to penalisation- five times the price of the product. They might also be subjected to imprisonment for a period of up to 1 year. 
  3. The registration process for BIS certification has been made online to increase convenience. The process has been eased out for the benefit of the jewellers.
  4. Although BIS has been running the hallmarking scheme for gold since April 2000, the entire exercise has been voluntary so far. 
  5. The aim of this move is to make hallmarking compulsory. This is done in order to protect consumers against victimization due to irregular or unreliable gold or silver purity. The new hallmarking rule is an effort towards developing India as a leading gold market in the World and to develop export competitiveness. When followed religiously, the Indian Gold Market will come in line with the global market standards.
  6. In order to ensure that the hallmarking is authentic, you must look for purity in carat and fitness, the BIS mark, the identification mark or the number of hallmarking centres, and the jeweller’s identity mark or number.
  7. Presently, there are 892 hallmarking centres across 234 districts in the country that hallmark gold of 28,849 BIS registered jewellers. 
  8. The rule of hallmarking is only applicable and implemented for jewellers. Common customers of gold can sell their old gold jewellery without the hallmark certification. 

What was the need for the New Hallmarking Rules?

The new hallmarking rule seems like a revolutionary move to primarily ensure consumer safety. While the new rules build the buyers trust towards the quality of gold they are purchasing, it also benefits the country. The hallmarking rule can develop the country and make it a hub for gold buying in the world. 

“The hallmarking of jewellery/artefacts is required to enhance the credibility of gold jewellery and customer satisfaction through third party assurance for the marked purity/fineness of gold, consumer protection,” the Ministry of Consumer Affairs, Food & Public Distribution said in a press release. It added, “This step will also help India to develop as the leading gold market centre in the world.”

India is the second largest consumer of gold in the world. In the first quarter of 2021, the country consumed 140 tonnes of gold, as per the report by the World Gold Council. 

The jewellery that conforms to the hallmark rule will enjoy a premium. This will lead to families bringing out their old jewellery to exchange and get new hallmarked jewellery. As a result, we can potentially monetise the (approximately) $ 1.5 trillion gold and silver jewellery that is already sitting inside the almirahs of Indian households.

Note before your next gold jewellery purchase

Gold hallmarking is a ‘purity certification’ of the yellow metal to identify its fineness. 

  • All gold jewellery must be hallmarked
  • Gold watches, fountain pens, and special types of jewellery like Kundan, Polki and Jadau will be exempted from this new regulation.
  • As per Trade Policy of Government of India Export & re-import of jewellery – jewellery for international exhibitions, jewellery for government approved B2B domestic exhibitions will be exempted from mandatory hallmarking. 
  • No penalties for manufacturers, wholesalers, and retailers of gold jewellery until the end of August.
  • Hallmarking of gold jewellery was initially set to begin from the 15th of January, 2021. However, it was postponed due to the COVID-19 pandemic.

What about your old gold jewellery?

Post the announcement of this new mandate, people panicked while wondering what would happen to their old jewellery with the hallmark. 

If you own jewellery without the hallmark, do not worry! The directive is only for sellers. It is aimed at improving and authorising the quality of gold purchased by consumers. 

The government stated- “In order to give adequate time to the manufacturers, wholesalers and retails of gold jewellery, there would be no penalties until the end of August. Old jewellery can be hallmarked as it is, if feasible by the jeweller or after melting and making new jewellery.” 

They also assured that a committee will be formed consisting of representatives of stakeholders, revenue officials and legal experts to look into the issues that emerge as a result of implementation of the new scheme.

How will new hallmarking impact you as a consumer?

  • The scheme has started with 256 districts of the country. As per the ministry, there has been a 25% increase every year in hallmarking centres in the last 5 years.
  • Jewellers with annual turnover of up to Rs 40 lakhs will be exempted. Watches, fountain pens and special jewellery like Kundan, Polki and Jadau will also be exempted.
  • No fees will be charged for the registration process. It’s a one-time thing. 
  • Consumers can fully trust the gold that they purchase when the gold is hallmarked. Make the right choice and prevent any unnecessary confusion while buying gold.
  • The ministry in its release clarified that old jewellery without hallmarks available in the households can be sold to jewellers. 
  • The new hallmarking regulation will also help in developing India as a leading gold market

How new hallmarking impacts jewellers?

Retail chains such as Tanishq, Kalyan Jewellers, etc. are massive and therefore they will not be impacted by the new rules. These retail chains are already running organised operations and hallmark their jewellery. 

Over 400 stores of Tanishq, Mia & Zoya across 215 towns are registered under BIS and have the hallmarking license. 100% inventory sold from these stores are hallmarked. This new mandate makes the industry more organised. Mandatory hallmarking will standardise the purity of gold jewellery and take the industry towards being more structured. It therefore emphasises on the shift of business and customers from the unorganized sector to the organised jewellery segment.

The government has exempted jewellery  with an annual turnover of up to Rs. 40 lakh. Medium sized businesses are given enough time to make the transition. No penalty will be levied until August. 

This mandate seems beneficial for organised jewellers while the smaller ones will have to quickly adapt to the new regulations and in fact take advantage of the new regulations and build trust among their existing customers.

A few supply-chain constraints may arise as the industry scrambles to comply with the new norms given the limited number of Assaying and Hallmarking centers. Experts believe that the government will ramp up these centers going forward.

Exemptions

Difficult areas that do not have a hallmarking and assaying center near them are exempted from this scheme, as of now. These include six northeastern states as well as Union territories like Jammu & Kashmir, Ladakh and Andaman & Nicobar. 

The government has also relaxed mandatory gold hallmarking guidelines for jewellers with an annual turnover of up to Rs 40 lakh per annum, so that small jewellers do not face problem in accessing assaying centers. 

Besides small jewellers, the government has also exempted those who export and re-import jewellery as per the government’s trade policy, jewellery meant for international exhibitions as well as for government-approved B2B domestic exhibitions. 

Manufacturers, importers, wholesalers, distributors, and retailers engaged in selling precious metal articles have to mandatorily get registered with BIS for hallmarking. However, artisans or manufacturers who are just making gold jewellery on a job-work basis for jewellers and aren’t directly related to the sale of jewellery to anyone in the chain are also exempted from registration.

Controversies

The mandatory gold hallmarking rules that came into force on June 15, 2021 put the jewellery industry at unrest.

With large quantities of stocks, and holding with consumers, the process stipulated could get daunting for both- jewellers and departments implementing such complex rules.

However, it is important to consider the diversity in a huge country like India. Here, there’s a likelihood of having diverse opinions on the table. Most decisions have the ability to disrupt harmony in the industry. 

After the repeal of The Gold Control Act, it’s taken years to bring back organised production of gold jewellery in the country, bring back artisans, and bring in training to make the young artists better equipped and better skilled. Today with a skilling process that has taken decades to do, it is unfair for one act or curate certain complex rules to destroy the skills that have been developed over the decades. 

Some of the troublesome features of this new regulation are: The rules of unique 6 digit identification number, responsibility of who should mark the products, the fate of estate (popularly called antique) jewellery that’s the heritage of India – which the rules mandates should be melted and remade, stocks held by the industry, exemptions to certain types of manufacturing like kundan, etc. 

Certain jewellery to be melted will destroy the heritage of India are still vexing questions unanswered. 

Be it temples, or old estates of families, inherited pieces which are pieces of art, which ought to be resold or auctioned as is, rather than being melted only to comply with a new prospective rule will be tantamount to destruction of thousands of years of Indian history. 

It’s good to have rules to maintain high quality with hallmarking for new pieces made, but all old jewellery should not be forced to be melted and destroyed. This is a question that needs to be addressed before making mandatory rules for old heritage pieces. 

The new rule has also dispensed with the ‘year mark’ which proves to distinguish the year of manufacture. That is a crucial aspect which is a prevalent practice in England and worldwide giving value to age and provenance. This must not be scrapped.

The question is- What is to happen to all the royal jewellery, or jewellery made by skilled and unknown artisans? Should they be melted? That would be unfair. The historic fabric of India must be maintained by not mandating melting of pieces of prior times. According to the jewellery specialist, there’s more to discuss. A hurried implementation will be unhealthy for the industry. All laws must be fully prospective only without impacting the entire stock holding of the country’s population. Why destroy art of the past for the sake of bringing in quality standards in future? 

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