Sona Kitta Sona Hai?
The purity of Gold is always a matter of concern while jewellery shopping.
You see, Gold happens to be very expensive. If someone were to dupe you with a shiny metal that is not pure, your entire investment would go down the drain.
But, don’t you worry. Now, you can be absolutely sure about the quality of Gold! How?
The new hallmark rule has made it mandatory for all jewellers to hallmark every piece of Gold jewellery that they produce. Meaning that the metal will be verified and the mark of purity will be stamped by an authorized body.
Neat, right?
Except that it is not. Not for the jewellers.
This rule has created a truckload of trouble for jewellers all over India. So much so, that around 3,00,000 jewellers (As per World Gold Council, there are 4,00,000 jewellers in the country) will be holding a strike as a mark of protest against the law.
So, what’s the ground reality?
Even before the law kicked in, big jewellery houses such as Tanishq practiced hallmarking. They had proper processes like inventory tagging and tracking, in place. Even their purity certificates are widely recognized.
So, the law does not really affect them. Neither does it apply to extremely small players with sales of less than Rs. 40,00,000. Then whom does it really impact?
The small jewellers that do not have the manpower to carry out the exercise required to get a Hallmarking Unique ID (HUID). And, the trouble does not end here.
The Hallmarking infrastructure in India is unable to cope with the demand. It takes 5 to 10 days to hallmark jewellery. And this extends the inventory cycle of the product. Meaning that the money of a jeweller will be stuck in the inventory for a longer period of time. But, why is that a problem?
Say you start a business of bangles with Rs. 1,000. You manufacture the bangle at a cost of Rs. 1,000 and sell it for Rs. 1,100. This way, you make Rs. 100. Now every time you sell the bangle, you can again produce a bangle at Rs. 1,000. If you can repeat this process every day of the week you would have made profits of Rs. 100, 7 times in a week. Total profits will equal Rs. 700.
But, if this hallmarking process delays your process and you can sell bangles only 4 times a week, your profits will go down. (This is a super-simplified explanation)
And so the reduced inventory turnover because of the hallmarking process is a major cause of concern for the jewellers. It reduces their profitability.
Well, there are other concerns too. HUID can be traced back to jewellers. The law has penal provisions. There are legal clauses around search and seizure.
Piecing all these provisions together, the jewellers are concerned that this has more to do with a crackdown and surveillance on the industry than to ensure the purity of Gold.
While the tussle continues, we could not help but notice the irony of the situation.
Humans have given Gold the glory and value it has. Yet, we need a certificate or hallmark stamp to prove it. Humans are strange, aren't we?
(Wondering how Gold became so valuable to humans? Read this!)
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