Presentation on Hallmarking Scheme for Gold by Parminder

Presentation on Hallmarking Scheme for Gold by Parminder Bajaj, Scientist F & Head Hallmarking Bureau of Indian Standards 3 rd 28 July 2007 International Gold Summit, N. Delhi

Gold Consumption – Key Markets & Indian Scenario Annual Gold Consumption in key markets (in Tonnes): China – 552, USA – 405, Middle East – 408, Turkey – 260, Saudi Arabia – 165, U. A. E – 115, U. K – 72 Annual Gold Consumption in India - 800 Tonnes • • • For Jewellery - 80% For investment - 15% Industrial use - 5% Jewellery Industry Profile in India (Estimated) • Jewellers/Retailers/Manufacturers > 3, 000 • Large scale units 100

Need to Regulate Quality • High Gold Consumption in India • Low Purity Index • Ensuring Value for money for consumer • Providing third party assurance on purity for consumers

Market Survey All India Average 2001 (120 Samples in 8 Cities) • Samples Failing • Average shortage in purity • Highest Purity Shortage 89 % 11% 38. 6% 2006 (162 samples in 16 cities) 90 % 13. 5% 44. 66% 2001 – Delhi, Mumbai, Chennai, Hyderabad, Jaipur, Bangalore, Ahmedabad & Kolkata 2006 - New Delhi, Gurgaon, Kanpur, Meerut, Ludhiana, Chandigarh, Jammu, Jaipur, Jodhpur, Indore, Thiruvananthapuram, Madurai, Pune, Vadodara, Bhubaneshwar, Ranchi,

What is Hallmarking • Hallmarking - The accurate determination and official recording of the proportionate content of precious metal. • Hallmarks - Official marks used in many countries as an assurance of purity or fineness of precious metal

Launch of Hallmarking Scheme in India • BIS launched Hallmarking Scheme in April 2000 for Gold Jewellery • Gold Medallions were covered in Sept. 2005 • Jewellery & Artefacts of Silver were covered in Oct. 2005

Objectives of Hallmarking Scheme • To protect consumer against the purchase of gold jewellery with lesser than declared purity • Develop export competitiveness • Make India as a leading gold market in the world

BIS Hallmarking Scheme The scheme, voluntary at present is operated as Third Party Certification Scheme and involves : • Certification of Jeweller (retailer)/ Jewellery manufacturer through grant of licence • Recognition of Assaying and Hallmarking Centre according to BIS prescribed criteria • The scheme is for : ØGold Jewellery/Artefacts (Medallions) ØSilver Jewellery/Artefacts

Certification of Jeweller • As per IS 1417: 1999 Gold and Gold alloys, Jewellery / Artefacts – fineness and marking - specification (aligned with ISO 9202: 1991) • Doc: STI/1417/4 Scheme for Certification of Gold

Grades of Gold Covered in IS 1417 & ISO 9202 IS 1417 ISO 9202 Fineness 995 958 916 875 750 585 375 Standard Gold (for medallions) 23 Carat } 22 carat } 21 Carat } Gold for 18 Carat } Jewellery and 14 Carat } artefacts 9 Carat } 916 750 585 375 No Negative Tolerance Permitted on Fineness/Purity

IS 1417: 1999 Requirements • Gold alloy including solders for manufacturing jewellery/artefacts shall be free from cadmium, iridium & ruthenium • Solders used shall be of same fineness as that of jewellery/artefact except 23 carat jewellery/artefact – IS 3095 : 1999 Gold solders for use in manufacture of jewellery- Specification (first revision) – IS 2790: 1999 Guidelines for manufacture of 23, 22, 21, 18, 14 and 9 carat gold (first revision)

IS 1417: 1999 Requirements • Gold jewellery/artefacts which may not be Hallmarked are those: – fail to comply with specified fineness/caratage. – which is not solid or which is made with a hollow center and then filled with base metal, cement, lac or other foreign substance thereby giving the article a false or added weight or strength unless the weight of gold is indicated on the article along with the jeweller’s/ sponsorer’s logo. – Gold article/ornament on which it is physically impossible to stamp the marks.

Components of BIS Hallmark • BIS Hallmark • • Purity /Fineness Mark Centre’s Mark (example) Jeweller’s Mark (example) Code Letter for the Year of Marking 916 MMTC TBZ H for 2007

Display Requirements in the Shop • • • Hallmarked Jewellery / Artefacts available here. BIS Licence Number. CM/LHallmark illustration and definition of each component 916 BIS LOGO • • • Hallmarking Centres Logo Jewellers Logo Year of Marking Code Letter PURITY The relationship of fineness of gold jewellery with caratage as specified in IS 1417 958 = 23 C 916 = 22 C 875 = 21 C 750 = 18 C 585 = 14 C 375 = 9 C Magnifying glass (at least 10 X magnification) for viewing hallmark available Complete name and address

Recognition of Assaying and Hallmarking Centre • Based on Criteria for Recognition of Assaying and Hallmarking Centres HMS /RAHC/G 01 - January 2001 for Gold (at par with Vienna Convention requirements) • Assaying of Gold - According to IS 1418 (aligned with ISO 11426) & • Centres to obtain Accreditation as per ISO/IEC 17025 from NABL

Steps in Assaying and Hallmarking • Receipt of Jewellery and its segregation article wise • Checking for homogeneity of the lot by XRF • Sampling by Scraping/ Micro Drilling/ Cutting etc. • Assaying of the composite sample as per IS 1418 by Fire Assay Method • In case the sample passes , entire Jewellery lot is hallmarked by laser marking and returned to the Jeweller • In case of failure in fire assay, Jewellery is returned back without hallmarking

Fee Structure • Application-cum-Processing Fee : Rs. 2000/ • Certification Fee (As applicable) : – Rs. 25000/- for a period of 3 years for location in Metropolis (Delhi, Mumbai, Kolkata & Chennai) – Rs. 20000/- for a period of 3 years for location in State/District Head Quarters – Rs. 10000/- for a period of 3 years for location in other than Metropolis & District Head quarters • Second licence in the same premises - no additional certification fees. • 25% discount for Multi-Chain outlets • Renewal Application-cum-Processing Fee : Rs. 1000/ • Taxes applicable 12. 36% as service tax & education cess

Hallmarking Charges • Hallmarking charges depending upon weight of article is payable by jeweller to the hallmarking centres Wt. of Article (for Gold) Charges/article Upto 20 gm Rs. 18 From 20 – 100 gms Rs. 50 Above 100 gms Rs. 100 Minimum charges for a consignment shall be Rs. 300/-

Consumer Protection • Consumers can get hallmarked jewellery tested from any A&H Centre If found lesser than marked purity -Testing charges to be refunded to jeweller who hallmarked Jewellery -Jeweller obliged to satisfy the customer through replacement

Initiatives by Govt. • Central Scheme for Setting up of A&H Centres in 35 select districts with one time Financial Assistance @15% of Cost of Machinery & Equipment subject to maximum of 15 lakhs per centre • Effective Consumer Awareness Campaign thru’ Print & Electronic Media • RBI Circular to Banks for Preferential treatment to Hallmarked Jewellery while granting Advances against Jewellery – November 2005 • Letter to Chief Secretaries of States/UTs for promotion of Scheme • Mandatory Hallmarking w. e. f. 1 January 2008

Initiatives by BIS • Regular Awareness Programmes for the Stakeholders across the country • A film on hallmarking for projection during consumer awareness programmes • Simplification & Rationalization of BIS Hallmarking scheme • Formulation of Hallmarking Regulations for legal back up

Simplification & Rationalization of Hallmarking Scheme Earlier After Simplification Rationalizatio n of Fee Structure Rs. 25, 800/- per annum ØIn Delhi, Mumbai, Kolkata & Chennai – Rs. 25, 000/- for 3 years Ø In District Head Quarters – Rs. 20, 000/- for 3 years Ø In other areas - Rs. 10, 000/- for 3 years Application Common for all Separate Form for Hallmarking

Progress of Gold Hallmarking Scheme since launch in April 2000 31 Mar. 31 2002 2003 2004 Mar. 2005 31 Mar. 31 2006 Mar. 2007 25 July 2007 No. of Licences 186 286 560 795 935 1410 3466 4106 No. of Centres 8 12 13 15 24 36 45 55 4. 766 14. 93 31. 4 62. 4 115 210. 3 3 254. 66 (As on 30 June Growth 0. 936 Articles Hallmarked (in lakhs) Licences granted for Silver since launch = 298

Region - wise Distribution Region Licences Gold ( Silver) Centres (As on 25 July 2007) Central Northern Eastern Western Southern Total 551 298 670 1386 1201 4106 (87) (56) (19) (89) (47) (298) Gold Articles Hallmarked (in lakhs) (As on 30 June 2007) 11 1 3 13 27 55 18. 21 35. 34 77. 45 123. 65 254. 66

Statewise No. of Licences for Gold(Silver)and A&H Centres State/U. T DELHI Licence Centres State/U. T Licence Centres 313 (52) 6 MAHARASHTRA 680 (20) 8 86 (6) 1 GUJARAT 696 (69) 5 67 (20) 2 DAMAN & DIU 3 0 CHATTISGARH 22(3) 1 TAMIL NADU 465 (7) 9 UTTRANCHAL 18 (2) 0 KERALA 310 (2) 11 102(15) 1 A. P 222 (7) 3 62 (3) 1 KARNATAKA 178(30) 4 RAJASTHAN M. P U. P PUNJAB STATES WITH NO LICENCE : (34) MANIPUR, MIZORAM, HARYANA 105 SIKKIM, ARUNACHAL PRADESH, NAGALAND, 26(1) 0 PONDICHERRY 0 MEGHALAYA, DADRA NAGAR HAVELLI, LAKSHADWEEP, ANDAMAN & NICOBAR

Impact of Initiatives Earlier Growth in No. of Licences 1080 licences granted in about 6 years upto 31 Dec. 2005 After Simplification 3188 licences granted since January 2006 in 18 months

International Accreditation • Vienna Convention, 1972 - Convention on The Control And Marking of Articles of Precious Metals – Hallmarking Convention • 18 Member Countries : Austria, Finland, Norway, Portugal, Sweden, Switzerland the United Kingdom, Denmark, Ireland, Israel, The Czech Republic, The Netherlands, Latvia, Lithuania and Poland, Hungary, Cyprus, Slovak Republic • In the process of acceding : Slovenia and the Ukraine • Others interested countries : Bahrain, China, India, United Arab Emirates, Uzbekistan

Role and Functions of the Hallmarking Convention • Objective of the Hallmarking Convention : ØFacilitate trade in precious metal articles ØMaintaining fair trade and consumer protection justified by the particular nature of these articles. • For that purpose, the Hallmarking Convention has introduced the first international hallmark – the Common Control Mark (CCM) – indicating the precious metal and its fineness.

Requirements of Vienna Convention, 1972 • Country to be member of UN or similar body • National Hallmarking scheme • Appropriate legislation on hallmarking • Independent assaying centres which meet the requirements of ISO/IEC 17025 (NABL Accreditation) • For further details of the convention please visit www. hallmarkingconvention. org

International Accreditation. Indian Status • Indian is No. 1 based on production of gold jewellery of 539 tonne in 2005 followed by Italy of 228 tonne • Indian Export of Gold Jewellery during 2005 – Rs. 171. 12 billion & expected to be at similar level in 2006 -07 • India as major player in Gem & Jewellery exports is considering joining Vienna Convention for easy access to European markets and enhanced image of Indian Jewellery • The existing infrastructure of certification is technically at par with the Convention Requirements • Adequate experience of jewellery certification available • Setting up of Independent assaying centre/referral lab and separate Hallmarking Regulations is under process • Participation in Vienna Convention meetings

Emerging Trends & Challenges Ahead • Implementation of Mandatory Hallmarking for Gold Jewellery from 1 January 2008 as decided by Govt. of India involving: Ø Ø Ø Setting up of large No. of A&H Centres Innovative Licensing Mechanism for Over 3 lakh Jewellers Regulatory Mechanism including Surveillance Requirement of Infrastructure & Manpower for BIS Involvement of State Govts. etc. in co-operation with the Major Stakeholders • Training of Artisans and Jewellers • Stepping Up of Awareness / Publicity Efforts during 2006 & 2007 • Boosting Exports of Gold Jewellery • Becoming Member of the Vienna Convention

Contact Details Head (Hallmarking Department) Bureau of Indian Standards 9, Bahadur Shah Zafar Marg New Delhi Phone : 011 -23234223 E mail : cmd 4@bis. org. in Website : www. bis. org. in

Thanks for the Attention