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Jewellery hallmarking to lead to consolidation in industry: Report

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Jewellery hallmarking to lead to consolidation in industry
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New Delhi: The government’s move to make hallmarking of gold jewellery mandatory could push the industry towards further consolidation and formalization, according to a report by brokerage firm ICICI Securities. The government made hallmarking of gold jewellery and artefacts compulsory from 15 June.

In the first phase, gold hallmarking norm is being rolled out in 256 districts and jewellers having annual turnover above Rs 40 lakh will come under its purview.

Majority of the country’s gold jewellery retailing market is unorganized and not led by large chains.

“We expect accelerated consolidation in the jewellery industry given the increasing regulatory requirements. According to World Gold Council, India has around 400,000 jewellers, out of which only 40,000 have been BIS certified. Experts believe that several jewellers have multiple business streams and sale of jewellery may not be the core business. Secondly, industry experts reckon that only 30% of the gold jewellery in India is hallmarked,” ICICI Securities said in a report dated 4 July.

The principal objectives of hallmarking are to protect the public against adulteration and to obligate manufacturers to maintain legal standards of fineness.

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In its report, analysts at ICICI Securities said the unorganized segment continues to be dominant in the jewellery market with a 70% market share.

Analysts project “material business disruption” for informal players who will need to convert their inventory to hallmarked standards. That’s because unorganized players holding non-hallmarked jewellery will have to upgrade it to meet hallmarking requirements.

This will result in increased compliance burden for unorganised players.

“We believe implementation of hallmarking may potentially lead to better GST compliance in the medium term. As per industry experts, the practice followed by some informal players of “selling without bill” may be difficult in the future. We believe the unorganised segment may potentially have to increase the making charges to make sale of hallmarked jewellery viable,” the brokerage firm said.

Courtesy: Live Mint

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