The government has deferred implementation of a new law on hallmarking of gold jewellery to certify their purity after trade concerns that it would disrupt the world's largest gold market.
"It has been deferred. We are not implementing it from Jan. 1," Consumer Affairs Secretary Y.S. Bhave told Reuters on Friday.
"The gold jewellery association wanted to have some discussion. We will hold a meeting with them in the next week or so," he added.
Traders said loopholes in the law meant that either their business could slow or be disrupted in a market that accounts for 30 percent of world gold consumption.
"There will be chaos and consumers will slow purchases as the availability will fall," said Rajiv Popley, director of Popley & Sons, a Mumbai-based jewellery chain.
Jewellery accounts for 80 percent 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.
Bhave said that although the law had been deferred for the time being, the trade had assured retailers were paying closer attention to purity to ensure customers got what they had been promised.
A government survey in 16 cities in 2006 found that out of 162 samples, 147 -- more than 90 percent -- fell short in purity terms.
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.
Gold jewellery can now be certified for purity at government centres, but a seven-year-old hallmarking scheme was to become mandatory from January 2008, although the industry says there are not enough assessors yet for the programme to work.
Bhave said that the deferment of the law was only temporary.
"It will be implemented..... maybe, very soon," he said.
WEAK INFRASTRUCTURE
Traders said that basically they welcomed hallmarking, but the new law had several loopholes and weak infrastructure for implementation would make it unworkable.
"In Mumbai alone, we have 12,000 jewellers and seven hallmarking centres," said Ashok Minawalla, chairman of the All India Gems and Jewellery Trade Federation.
"Will a hallmarking centre be able to handle about 1,500 jewellers per centre?" he asked.
All told, 25 hallmarking centres have opened in Indian metropolitan areas, but traders say the cities of Mumbai, Delhi, Chennai and Kolkatta alone would require more than 500.
Traders also oppose the requirement of a licence for a jeweller to sell hallmarked jewellery.
"We believe hallmarking is required for the industry," said Dinesh Jain, who heads the promotion committee of All India Gems and Jewellery Trade Federation."
"But once you make it mandatory that no jeweller can sell anything but hallmarked jewellery, why do you require a licence?" he asked. Bhave said that the system of licencing would be required to ensure proper compliance, and added that the concerns expressed were overblown.
Bhave said two random samplings of gold jewellery by government officials had found them to be short on purity by an average 13.5 percent.
"It is a staggering figure," he said. "All we are concerned about is the customer should have the right purity."
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