ASSOCHAM calls for implementation of Consumer Protection Act in gold

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SME Times News Bureau | 30 Mar, 2010
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has called for strict implementation of Consumer Protection Act in Gold trade, especially in rural areas so that it's gullible consumers is not cheated and sold off questionable quality of gold.

In it's representation to the government, the ASSOCHAM Secretary General, D S Rawat pointed out that strict implementation of the Act in the gold trade is lacking, particularly so in rural areas where local vendors promote and encourage sale of sub-standard quality of gold. This has been happening at wide spread levels because such vendors are hardly caught in the absence of proper monitoring authorities.

Therefore, if sale of sub-standard quality of gold has to be eliminated and rural consumers of bullion are to be ensured a good quality of gold, the centre will have to strictly implement the Consumer Protection Act.

According to ASSOCHAM, surveillance centres should be set up across the country to protect rights of the consumers. Secondly, refineries in India need to be standardize and are not equipped with modern machines. It is because of this reason also that the sale of sub-standard gold has been increasing. The Indian refineries, refining gold need to equip themselves with modern machines which can be possible provided these are encouraged to forge alliances with world class refinance.

The Chamber has also stressed the need for assaying and hallmarking of gold with help of Bureau of India Standards, arguing that it should be given more impetus to help to ensure the quality of gold transacted within the country. This could amount to help gold consumers buy a good quality standard material as also assured them consumer protection.

According to estimates made by ASSOCHAM, demand for yellow metal over the past decade has remained one and half times more than in the United States. Rural sector has fuelled close to 1/3 of the total demand of the gold.

Since implementation of Consumer Protection Act in rural areas is almost negligible and is also hardly challenged if brought to notice, one can imagine the volumes of the sale and margins that local gold vendors make out of questionable gold sale.

The annual consumption of gold in rural areas has increased from 30 tonnes way back in 1980 to over 350 tonnes as of now. Presently, the rural consumer is not only buying gold for insurance purpose but also making investments. The issue of questionable gold was brought to limelight when rural consumers wanted to mortgage this assets of their to banks for investments, it is only through this process that the falsification in gold was noticed.

It is also estimated that there are over 4 lakh jewellery manufacturers, retailer units throughout India, mostly employing upto 10 workers. Although there are above 100 large mechanized factories employing upto several 100 workers, there is an abundance of cheap skilled labour.

As the traditional jewellery is almost totally handmade, the workforce is large and total’s about 2 million. Many manufacturers and retailers sub-contract work out to small workshops and this makes gold stock control and cartage quality control difficult to achieve. The sale of questionable gold has been increasing due to this reason also.

In rural areas, a buyer for instance would be told that he has brought a gold of 22 carats, while the vendor is actually giving him a gold article only of 18 carats and this is how the consumer lose out of money. In India, the emphasis is on high cartage jewellery and problems are also arisen through the lack of suitable high carat solders.