Lack of Transparency in Gold jewellery prices
Tuesday, September 7, 2010
While the price of gold is fixed and uniform, there is no uniformity in the making charges. While branded jewellery is sold with making charges of Rs 150 per gram or even more, the small jewellers charge Rs 60-80. Sometimes, your family jeweller may be willing to let go of even that labour charge.
And in the capital's jewellery markets, the banners and hoardings all around claim 'Pure Gold-No Making Charges'. So, how is it that when the price of the gold is the same at all showrooms, jewellers sell the ornaments by charging a nominal amount as making charges? Afterall, the jewellers have also to pay the wages of the goldsmiths and bear the overhead costs.
The answer to this question was provided in October, 2001 by the Bureau of Indian Standards (BIS). In a survey conducted by BIS on gold jewellery, 15 jewellery items were purchased from small and big outlets located in seven important markets of Delhi. All the jewellers assured that the pieces purchased were of 22 carat gold with the 916 required fineness. All the 15 samples comprising bangles, rings, chains, eartops and necklace sets were tested as per ISI 1418: 1999 standard at a BIS approved assaying centre of MMTC. The results, however, were an eye-opener.
Out of the 15 samples, only three were found to be of the claimed purity. The rest were of much lower purity than the claimed 22 caratage. On an average, the purity fell short by 15.5 per cent. Out of 12 samples, seven were short in purity by more than 15 per cent.
Thus, six samples of 22 carat gold turned out to be 18 carat.
One sample was of 13.5 carat, one of 19 carat, another of 21 carat, a fourth of 17 carat and the remaining two were also below the claimed 22 carat.
There is yet another allurement.
Every jeweller will assure you that he will buy back the ornaments, if returned, at the then prevailing rate of gold.
The knack is that the ornaments are rarely returned because they pass on from one generation to the other and by the time, they are to be returned, if at all, for remaking, many years have passed by and no one remembers from which shop they were purchased.
Even if one manages to reach the same jeweller on a rare occasion, he will gladly pay the price prevalent but deduct in the process the tanka, wastage, meena and polish charges.
All this tantamounts to unfair trade practice because the consumers do not get the ornaments of the projected quality.
If the jewellers levy the full making charges and add to it their reasonable profit, the consumers will at least get the ornaments of the claimed caratage. But with the currently prevailing deceptive methods of reducing the making charge, the ornaments of far lower purity are passed on. This has been going on since times immemorial.
The above trade practice was noticed by the MRTP Commission as well as by the Consumer Courts. But barring passing orders in isolated cases, no action of general application has been taken and the malaise has been continuing.
Pending the authorities taking up the issue for an authoritative verdict, two courses need consideration for immediate implementation. One, that the jewellers can be directed to charge their due making charges and not to meddle with the quality of gold. The second alternative is to ensure that only hallmarked jewellery is sold. Jewellers will never do so voluntarily because they will have no chance of fooling the customers as has been going on everywhere.
Hallmarking is a foolproof method to accurately determine and record the exact gold content in the jewellery. It is high time that the governmental steps in and makes hallmarking of jewelery obligatory to put an end to fleecing gold buyers.
And in the capital's jewellery markets, the banners and hoardings all around claim 'Pure Gold-No Making Charges'. So, how is it that when the price of the gold is the same at all showrooms, jewellers sell the ornaments by charging a nominal amount as making charges? Afterall, the jewellers have also to pay the wages of the goldsmiths and bear the overhead costs.
The answer to this question was provided in October, 2001 by the Bureau of Indian Standards (BIS). In a survey conducted by BIS on gold jewellery, 15 jewellery items were purchased from small and big outlets located in seven important markets of Delhi. All the jewellers assured that the pieces purchased were of 22 carat gold with the 916 required fineness. All the 15 samples comprising bangles, rings, chains, eartops and necklace sets were tested as per ISI 1418: 1999 standard at a BIS approved assaying centre of MMTC. The results, however, were an eye-opener.
Out of the 15 samples, only three were found to be of the claimed purity. The rest were of much lower purity than the claimed 22 caratage. On an average, the purity fell short by 15.5 per cent. Out of 12 samples, seven were short in purity by more than 15 per cent.
Thus, six samples of 22 carat gold turned out to be 18 carat.
One sample was of 13.5 carat, one of 19 carat, another of 21 carat, a fourth of 17 carat and the remaining two were also below the claimed 22 carat.
There is yet another allurement.
Every jeweller will assure you that he will buy back the ornaments, if returned, at the then prevailing rate of gold.
The knack is that the ornaments are rarely returned because they pass on from one generation to the other and by the time, they are to be returned, if at all, for remaking, many years have passed by and no one remembers from which shop they were purchased.
Even if one manages to reach the same jeweller on a rare occasion, he will gladly pay the price prevalent but deduct in the process the tanka, wastage, meena and polish charges.
All this tantamounts to unfair trade practice because the consumers do not get the ornaments of the projected quality.
If the jewellers levy the full making charges and add to it their reasonable profit, the consumers will at least get the ornaments of the claimed caratage. But with the currently prevailing deceptive methods of reducing the making charge, the ornaments of far lower purity are passed on. This has been going on since times immemorial.
The above trade practice was noticed by the MRTP Commission as well as by the Consumer Courts. But barring passing orders in isolated cases, no action of general application has been taken and the malaise has been continuing.
Pending the authorities taking up the issue for an authoritative verdict, two courses need consideration for immediate implementation. One, that the jewellers can be directed to charge their due making charges and not to meddle with the quality of gold. The second alternative is to ensure that only hallmarked jewellery is sold. Jewellers will never do so voluntarily because they will have no chance of fooling the customers as has been going on everywhere.
Hallmarking is a foolproof method to accurately determine and record the exact gold content in the jewellery. It is high time that the governmental steps in and makes hallmarking of jewelery obligatory to put an end to fleecing gold buyers.
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