UPDATE: India Cabinet Backs Compulsory Hallmarking For Gold Jewelry

--Law has to be ratified by parliament
--Lack of hallmarking infrastructure could hamper nationwide implementation
--Jewelry accounts for 80% of sales in India, the world's largest consumer
(Adds comment from official in 2nd paragraph, trade executive's comments in
5th, 6th and 9th paragraphs,


Jewelry buyers across India may soon be able to get a
guarantee of the quality of the gold they're paying for, with the federal
cabinet approving an amendment to a law which could lead to compulsory
hallmarking.
The amendment has to be ratified by parliament before it becomes law. "This
will take at least seven to eight months," a top government official told Dow
Jones Newswires Wednesday.
The move is significant in that jewelry accounts for 80% of gold sales in
India, the world's largest consumer of the precious metal. India's gold demand
in 2011 was estimated to be around 960 tons by the World Gold Council.
Government officials say traditional handcrafted pieces, with their many
joints and alloys used for soldering, leave room for dubious claims on
caratage. Currently, hallmarking of gold jewelry is optional for retailers.
Implementing the law could prove to be tough as much of India's jewelry is
handmade and fashioned in small workshops, often using blowpipes and candles or
oil flames.
Also, although even the smallest of towns have at least one jewelry shop,
hallmarking centers so far exist only in the bigger cities, said Dinesh Jain,
director of the All India Gems and Jewellery Trade Federation. "We support
hallmarking, and we want it to be made mandatory," he said. "But they have not
given us a copy of the draft [law], so we really don't know what is there in
it."
In the absence of compulsory hallmarking, even some leading gold jewelry
retailers opt out of hallmarking, relying on their brand name alone to win
customers' trust.
But it isn't unusual for a customer buying gold jewellery labelled 22 carats
to find out that it was only 18 carats when trying to sell or exchange it.
Jain said his federation, which represents the local jewelry industry, had
asked the government to allow even trade bodies to hallmark gold jewelry
besides state-run centres to simplify the task. "Hallmarking shouldn't lead to
a licence [regime], riddled with red tape."
Gold jewellery can now be certified for purity only at government centres.
The government tried to introduce such a law about three years ago, but
deferred the proposal as it didn't have adequate number of hallmarking centers
for certifying the jewelry. The number of centers are still around the same.