India’s gold jewellery exports could multiply fivefold to $40 billion annually in five years, on winning the confidence of global consumers through credible hallmarking of ornaments, the World Gold Council said in its latest study on Thursday.
Artisanal Indian jewellery is widely prized for intricacy and craftsmanship.
Yet, according to WGC findings, India exported gold jewellery of only $8 billion in 2013-14, about eight per cent of the global market.
India’s Gems & Jewellery Export Promotion Council, however, put the figure for that year at $8.36 bn, then rising 18 per cent to $9.85 bn in 2014-15.
“This has significant potential to increase if quality control is addressed.
"We estimate that exports could rise to five times to $40 b by 2020 if international purchasers felt able to place their trust in Indian gold,” said Somasundaram PR, the WGC's managing director (India).
Against only an eight per cent share in global gold jewellery consumption, our annual gold import of 850-950 tonnes is 20-25 per cent of global gold demand.
“This anomaly arises largely because foreign buyers, for instance those from West Asia where hallmarking standards are stringent, have little confidence in the purity or quality of Indian gold. Hallmarking would boost the credibility of Indian jewellery and drive demand from retailers and wholesalers in Western markets," Somasundaram added.
Gold leakage is the term for consumers being misled when they purchase jewellery (or coins).
They believe they are buying gold of a certain caratage and value but the gold could be under-carated and overvalued.
The situation is more so in the north and east, among smaller, less professional jewellery outlets.
Since the introduction of a hallmarking standard in 2000 by the Bureau of Indian Standards, the country made good progress in developing a system in this regard.
However, only 30 per cent of Indian gold jewellery is currently hallmarked.
There are widespread differences in purity and an average under-caratage of 10-15 per cent.
Hallmarking could reduce that leakage, benefiting consumers across the economic spectrum, particularly at the lower end, the study said.
A lack of BIS-recognised hallmarking centres is also likely to have an impact on the government’s gold monetisation scheme.
“A credible hallmarking system, with a widespread presence of assaying and hallmarking centres, is essential for both the gold jewellery industry and for implementation of a successful monetisation scheme,” Somasundaram said.
“Hallmarking is to jewellery what ‘know your customer’ norms are for financial services.
"It is essential to the success of the jewellery industry in a world where consumers seek transparency, quality and consistency and is critical to building consumer trust and confidence.”
- India has potential to raise gold jewellery exports fivefold to $40bn by 2020
- Trust from overseas importers required to win
- Credible hallmarking centres may help win buyers’ trust
- Only 30% of jewellery produced are hallmarked since 2000
- Strengthen governance around hallmarking processes
Photograph: Kind courtesy, Tanishq