Dubai: The legions of Indian consumers holding gold will have nothing to worry about the new government regulations on 6-digit hallmarking that comes into full effect from April 1. The new requirements will also not have any bearing on gold brought into the country by expats or residents returning to India.

The hallmarking change also will not "impact in any way Indian expats wanting to sell their gold holdings at any point in India," said Abdul Salam K.P., Vice-Chairman of Malabar Gold & Diamonds. "Gold retailers in India will still buy that gold based on the metal's price, melt it and apply for the new hallmarking. The hallmarked gold will be sold thereafter in the stores.

"But there is no threat to individuals bringing gold into India and wanting to sell to take advantage of the lower retail price if bought in the UAE or Gulf."

Similarly, Indians holding gold - whether inherited or bought through the years themselves - need have no concerns about the rule. 

Tough deadline for gold retailers

But retailers in India will have their work cut out – they have to ensure that every bit of gold sold at their stores from April 1 have the new hallmarking standard. That, according to multiple industry sources, is going to be one difficult task.

What's new with India's hallmarking rules:

New Hallmarking Unique Identification Number (HUID) requires BIS logo, caratage, a 6-digit alphanumeric number.

The old hallmarking rule required BIS logo, caratage, the hallmarking center's name, and jewellery shop's name.

From 4 to 6 hallmarking

With the mandatory 6-digit hallmarking, the Indian government wants to clamp down on gold entering the Indian retail market via smuggling or through other ‘parallel’ channels. It replaces the 4-emblem hallmarking that was prevalent earlier.

Retailers have been told to get all the gold they carry in their showrooms or order books feature the 6-digit hallmark by April 1, which coincides with the start of a new financial year in India. This is where the difficultly lies.

“There are 500,000 licensed gold retailers in India – and many still have a mix of the old and new hallmarked gold in their stores,” said Abdul Nazar, senior member of the All India Gem and Jewellery Domestic Council.

“There aren’t that many hallmarking centres to cover all the districts in India. Meeting the April 1 deadline on all gold carried in stores will be next to impossible. The gold retail industry could have done with more time being granted by the Indian government to be fully compliant."

Cut down smuggling

Where the 6-digit hallmarking would come in handy is to place serious pressure on gold bars entering India through grey channels. According to industry sources, these bars feed into a highly unorganised parallel market, where few questions are asked about the antecedents of what's bought and sold. With the digital hallmarking stamp compulsory for all retail channels, it's felt that these parallel markets would feel the pressure of having to show further proof of veracity.

"The parallel gold market fed by smuggled gold was seriously undermining the organised industry, especially the small and mid-sized retailers across the length and breadth of the country," said Nazar. "If the tightened digital hallmarking changes that, it would be a major breakthrough."