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According to BIS (Bureau of Indian Standards) Additional Director General Y P Singh "gold consumers are being taken for a ride by unscrupulous jewellers, who on an average sell (ornaments containing) 15 per cent shortage in gold purity, which comes to around Rs 6,000 crore per annum." A couple of years back the Reserve Bank of India Governor Y V Reddy stated in a paper presented by him at an international seminar on gold that consumers lost Rs 80 billion annually due to poor quality gold jewellery. The numbers may differ but everybody agrees that Indian consumers are indeed being taken for a ride by jewellery retailers. Contrary to it, other major gold consuming countries have mandatory laws that stipulate caratage to be stamped on every item of gold jewellery sold. Known as hallmarking this is an age-old system, which originated in London at Goldsmiths' Hall, and is adapted almost universally. Countries like UAE, Britain, France, the Netherlands, Morocco, Egypt, and Bahrain compel every jeweller to hallmark every piece of jewellery sold. In Dubai, which is lovingly referred as "city of gold", the government is determined that its gold industry should operate at the highest quality and ethical standards. The rules are rigorously enforced through a policy of random checking of jewellery stores to make sure that they sell exactly what is stamped on the piece. If a store fails the municipality's laboratory examination it is heavily penalised, and may also face termination of permission to operate the business. In many other countries, where there is no compulsory marking procedure to be followed, manufacturers themselves stamp the jewellery both with their own individual identifying mark and the caratage or fineness. Hallmarking is extremely crucial in India, a country where jewellery is made of much purer gold. While the most widely used alloys for jewellery in Europe are 18 and 14 carat, and 10 and 14 carats in the US, Indian jewellery is usually 22 carats. The second choice is 20, and most people never like it less than 18 carats. The extent of mischief can be guessed from a simple fact that while a 22 carat jewellery contains 91.67% gold, a 14 carat contains merely 58.3% - thus leading to a direct loss of about one third of gold. The Bureau of Indian Standards, the autonomous body responsible for hallmarking gold, has found that jewellers succeed in selling highly impure gold to unsuspecting buyers. A couple of years back BIS and the World Gold Council studied quality of gold jewellery sold in India and found that almost 80 per cent of jewellery being sold was of inferior quality than what was claimed. In case the jewellers claimed a piece to be of 22 carat, in effect it was found to be no more than 16 or 18. In some cases, the shortfall in the caratage went down to 14 and 12, thus marking huge losses for the consumers. In India a jewellery piece has been traditionally charged on the basis of the weight multiplied by the gold price of the day plus a nominal making charge (say Rs 20-80 per gm). One and a half decade back when the official gold imports were banned, and smuggling was the only channel of supply, the jewellers often cheated their consumers by charging them a far higher gold price than the international market. In absence of business tv channels, internet, and lack of financial print media, the consumers in small towns had no way to find out the genuine price, and thus were forced to pay what the jewellers asked. Today, after the gold import liberalisation, although that scandal has subsided, the cheating through poor caratage goes on unabated. The most common method in the past was to steal a bit of gold and then replace it with copper. Today the jewellers have upgraded their knowledge and have begun alloying real gold with ruthenium, a metal that blends very well with gold, and at the same time is far, far cheaper. What's wonderful about ruthenium is that its detection is difficult. It cannot be detected even when the fire assay method is used. Its presence is found out only with the application of spectrographic analysis, a method that is not only very expensive but also very rare to find in India. The facility being accessible to very few people in the country, is thus unable to ensure the consumer safety. Other metals are used as well. According to a report on the website of World Gold Council "iridium and cadmium have been used to dilute the purity of gold by some manufacturers." However as of now the winds of change are blowing over the Indian jewellery industry. The government has woken up by numerous consumer complains, and has drawn up an ambitious programme to discipline the jewellers and manufacturers. To contain the alarming situation with regard to sale of impure gold, BIS has decided to introduce a new set of hallmarking regulations, which will take care of the cases relating to gold impurity. Besides, BIS will also make hallmarking of gold jewellery mandatory from January, 2008. Meanwhile, many jewellers have adapted an in-house hallmarking system to attract additional customers and thus beat the competition. Many jewellers are offering buy-back guarantees to the consumers, so as to instill confidence in their mind. Many jewellers/manufacturers have begun to print clearly the caratage on the inside of the pieces to convince the buyers. With the government and the jewellers waking up to the fact, chances are the consumers in the coming years will be able to buy purer jewellery. This is only likely to attract more customers to the gold markets, thus leading to increased consumption in India.
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