The Jewelry Industry Is About To Collapse National Hallmarking Task Force

The national working group was formed from 350 associations/federations representing the east, west, central, north and south areas of the entire gemstone and jewelry industry. The purpose of this committee is to ensure a smooth implementation of mandatory hallmarking across the country.

The Honorable Minister of Consumer Affairs, Shri Piyush Goyal met virtually with the industry on May 24, 2021, where after realizing the seriousness of the matter, formed an expert committee of around 19 industry members of jewelery to sit down with DG BIS and discuss, deliberate on the genuine concerns and resolve the issue in the next 3 consecutive virtual meetings.

A final meeting was convened in Delhi on June 15 with all members of the expert committee, the BIS team and the Honorable Minister Shri Piyush Goyal, where he discussed, debated and mandated the concerns to the satisfaction of the committee . It was also mandated that a High Level Committee (HLC) be formed to structure the legal framework, was mandated at this meeting, create an SOP in the same manner, as mandatory hallmarking was declared from 16 June itself.

Instead, the ministry formed an “advisory committee” led by DG BIS, consisting of members from BIS, various ministries, the export council, the consumer forum and 3 national industry members. To date, after 3 Expert Committee meetings and 4 Advisory Committee meetings, apart from a few issues, no substantive resolutions have been reached and no clarifications have been issued. BIS, as an independent authority, only publishes FAQs, which have so many flaws and ambiguities. It seems the BRI is determined to enforce things its own way, unaware of the seriousness of the industry’s concerns.

Since July 1, while the issues are still under discussion in the advisory committee, the BIS has arbitrarily imposed a new marking system that has no connection between purity and the standard of gold used. This new marking has nothing to do with the main purpose of BIS or hallmarking, which is to verify the purity of gold. The SOP formed to operate this new tagging system disrupted the entire industry and crippled the business. Punching, which used to take 2 to 4 hours, is now done in 5 to 10 days. Hallmarking centers are totally unable to manage inventory waiting at jewelers for hallmarking. The accumulation of inventory awaiting punching will take 5 years at this current operating speed, while the BIS continues to view this as a start-up problem.

The government had appointed Niti Aayog to draw up a detailed report on the compulsory hallmarking after a comprehensive study of it. The BRI has all but ignored the key recommendations of the Niti Aayog report on punching and has now reached a point of no return and must try to review every recommendation.

Dinesh Jain, director of the All India Gem and Jewelery Domestic Council (GJC) representing the MSME sector and member of the central committee of the national hallmarking task force, said: “Existing stock of approx. 5 crore Jewelry must be hallmarked. At the current capacity of the punching centers, 100,000 pieces per day, it would take about 500 days, or 18 months to punch the existing stock at the jewelers and at the maximum capacity of the punching center, it would take another 250 days, or 9 months to mark existing stocks. The question remains, when will the new stock of minted coins of 12 crores this year be stamped, worth 4,50,000 crores, considering the market size of 900 tons. This will eventually lead to the collapse of the industry.

Jain added: “It is unfortunate that jewelers need to be registered to sell quality products to consumers, which is unimaginable. Cancellation of registration on minor matters for a mere element of non-cooperation, civil nature and search and seizure procedure and criminal criminal provisions for a civil offense will again result in the “Raaj license” and the jewelry industry will be exposed to corruption. Why is criminal liability imposed on the jeweler who only sells the jewelry and did not produce or hallmark the jewelry? It is unreasonable, arbitrary and wrong in law, when a jeweler has followed all the protocol issued by BIS to have a jewel hallmarked.

Fatehchand Ranka, President of Maharashtra Sarafa Swarnakar Mahamandal and a member of the Central Committee of the National Hallmarking Task Force, said: “During the 40 days of the mandatory hallmarking regime, 72 hallmarking centers were either canceled or suspended from across the country. Previously, out of 933 crosses, almost 450 crosses were suspended. This shows that one out of two AHCs has been canceled or suspended for breaking the law. How can we rely on such a system and such punching centers and be victims of their failure?

Ranka added, “The new tagging system under the guise of HUID has been introduced to monitor punch centers. It is undesirable that jewelers have been dragged into the administrative process of HUID, which has nothing to do with purity, which is a serious concern for the industry in conducting its daily business. How can we as jewelers accept such frivolous systems and processes adopted by BIS and allow our customers to become victims.

Yogesh Singhal, Chairman of the All India Bullion & Jewelers Federation and Central Committee Member of the National Hallmarking Task Force, said: “When an independent third party assesses or certifies a product, how can the first party be held responsible? What kind of laws are these? The current BIS law makes the jeweler responsible for the lack of purity of a jewel after it has been hallmarked by a hallmarking center. While the industry has continually opposed it with the BRI and until today, no action has been taken and the jeweler has become an easy target.

Singhal added, “During the past 20 years of voluntary hallmarking, BIS applies 4 marks which identify purity, jeweler, hallmarking center and BIS. This is also the accepted standard, followed worldwide. I don’t understand, what were the failures of the previous punching system and why the new marking system / HUID and process had to be replaced? If the previous system fails, who will be responsible for the millions of jewels that were hallmarked before and will remain in circulation for decades and who will be the victim of these blunders? Are you also going to make the jewelers responsible here! If there was no failure of the previous hallmark system, then why is this new marking / HUID being imposed, when the whole jewelry industry is opposed to it.

In conclusion, the Task Force states that BIS cannot change the tradition and fabric of the jewelry industry by putting the livelihoods of hundreds of thousands of jewelers at stake and thus affecting millions of people to charged. Only a handful of companies and large retailers will survive, while the rest of the jewelers will have no choice and will be forced to go out of business.