In response to a growing demand for affordable gold jewellery and an increase in chain-snatching incidents, the Indian government is set to make hallmarking of 9-karat (KT) gold jewellery mandatory. This move, driven by a combination of rising gold prices and safety concerns, is expected to be implemented within the coming months, according to sources familiar with the development.

Currently, hallmarking is mandatory for six gold purity categories—14KT, 18KT, 20KT, 22KT, 23KT, and 24KT—under the Bureau of Indian Standards (BIS) regulations. The addition of 9KT gold, which is notably less expensive, aligns with the preferences of younger consumers, particularly those from Generation Z, who are increasingly opting for more budget-friendly options.

Gold Market Trends

India, the world’s second-largest consumer of gold, is witnessing a shift in demand towards lower-purity gold, fueled by rising prices of higher-purity gold and the appeal of more affordable options. As of August 2024, the price of 22KT gold stood at Rs.68,000 per 10 grams, while 9KT gold ranged between  Rs.25,000 and  Rs.30,000 per 10 grams. This trend is expected to continue, with overall gold demand in India predicted to reach 750 tonnes by the end of 2024, according to the World Gold Council.

An official announcement regarding the new hallmarking requirement is anticipated following consultations with key stakeholders, including representatives from the gold jewellery trade. These discussions are scheduled to begin soon.

Addressing Safety Concerns

The push for mandatory hallmarking of 9KT gold also comes amid a surge in chain-snatching incidents across India. Data from the National Crime Records Bureau (NCRB) reveals a significant increase in such crimes, with reported cases rising by 32.54% from 7,000 in 2021 to 9,278 in 2022. This has led consumers to opt for less valuable gold, which is perceived to be a safer choice.

Naval Agarwal, convener of the Jewellery Panel Committee of the Gems and Jewellery Export Promotion Council (GJEPC), welcomed the move, stating that while their role as an export promotion council is limited in this matter, they support the introduction of mandatory hallmarking for 9KT gold. Consumers deserve assurance regarding the authenticity and purity of their purchases.

Impact on Market

Currently, 9KT gold items are stocked in limited quantities by major retailers. However, the introduction of mandatory hallmarking is expected to compel retailers to increase their inventory of these more affordable gold products, ultimately benefiting consumers. This will lead to wider availability of certified 9KT gold jewellery, making it easier for consumers to access verified products at lower prices, according to a source involved in the consultation process.

As the festive season approaches, gold demand is expected to surge, further highlighting the importance of accessible and certified gold products. India, a major importer of gold, saw its total gold import value rise to $45.5 billion in FY24, up from $35 billion in FY23, with Switzerland, the UAE, Peru, and Ghana being key suppliers.

The Ministry of Consumer Affairs, the BIS, and the Retail Association of India have yet to respond to requests for comment on the upcoming regulations.

Source: livemint