As govt weighs mandatory silver hallmarking, new report flags economic & operational bottlenecks

Hallmarking certifies the purity of precious metals and safeguards buyers from fraud. India made gold hallmarking mandatory in 2021, but silver hallmarking, introduced in 2005, remains voluntary. As the government evaluates extending mandatory hallmarking to silver, a new report warns of substantial economic and operational hurdles that must be addressed for a smooth transition.

Report flags readiness gaps

A Koan Advisory study titled “Economic and Operational Implications of Mandatory Silver Hallmarking in India” finds broad industry support for transparency and consumer protection, yet cautions that pushing silver into a mandatory regime without shoring up infrastructure could strain the ecosystem. The report notes that India has around 230 BIS-recognised Assaying and Hallmarking Centres (AHCs) for silver, compared with approximately 1,622 AHCs for gold—an infrastructure gap that becomes more acute given silver’s distinct market characteristics.

The report also highlights geographic concentration: available data indicate AHCs exist in only about 90 of roughly 800 districts—around 10 percent coverage—leaving many manufacturing and retail hubs dependent on distant centres. While mandatory gold hallmarking now spans close to half of all districts and has significantly curbed false caratage, the silver network is far less developed.

In a step toward traceability, the Bureau of Indian Standards introduced a hallmark unique identification (HUID) requirement in September 2025 for voluntarily hallmarked silver items. Each jewellery piece must carry a six-digit alphanumeric code enabling unique identification and tracking.

Silver’s market structure differs from gold

India’s silver consumption is estimated at up to 7,000 tonnes annually, versus 600–700 tonnes of projected demand for gold in 2026. Of total silver use, about 20–30 percent goes to industry, 20–25 percent is held as bullion for investment, and roughly 3,500–4,000 tonnes are fashioned into ornaments, artefacts, coins, and similar products. Domestic output is around 700 tonnes, with the rest imported from countries such as Mexico, China, Argentina, and Chile. By comparison, India consumes roughly 800 tonnes of gold per year.

Production models also diverge. Gold jewellery manufacturing has consolidated over time into larger, organised players. Silver, by contrast, remains largely decentralised, relying on artisan networks and small workshops embedded within local craft clusters. This dispersion has direct compliance implications: moving to a mandatory hallmarking regime would require widespread BIS registration, record-keeping, and reliable access to AHCs. In regions with limited centre availability, artisans and manufacturers could face added travel, time, and cost burdens.

Material characteristics further complicate matters. Silver is less dense than gold, so producing an equivalent value of items generally involves far greater physical volume. Coupled with the prevalence of lower-purity grades and lighter-weight designs, the number of individual silver pieces is significantly higher. This elevates per-piece processing demands at AHCs and amplifies potential bottlenecks.

Cost pressures on lightweight items

The report recommends that any initial mandate exempt very light silver items—below a specified weight threshold—given their price sensitivity. Industry feedback suggests a large share of silver jewellery sits in the sub-5 to 10-gram range, where hallmarking fees can represent a notable share of the retail price. For instance, on a lightweight item costing around Rs 500, a Rs 50 hallmarking fee, plus transport, packaging, and logistics, can be disproportionately high.

Most silver articles reportedly retail between Rs 300 and Rs 2,000, with many items under five grams. Without calibrated exemptions or differential fee structures, the added cost of compliance risks squeezing margins for small artisans and raising end-prices for consumers—potentially undermining demand in a cost-sensitive segment.

Logistical strain on distributed inventories

Retailers often manage silver inventories across numerous outlets, regional warehouses, and third-party logistics hubs, regularly reallocating stock based on local demand. Under mandatory hallmarking, large volumes may need to be consolidated and shipped to AHCs, then redistributed—a cycle that increases transport and coordination costs and ties up inventory while it awaits certification. For fast-moving, low-value items, such downtime can carry meaningful opportunity costs.

Phased transition and collaborative governance

Given the sector’s diversity and the existing infrastructure gap, the report urges a phased transition of three to five years. It suggests forming a dedicated working group comprising BIS officials, hallmarking centres, industry associations, jewellers’ representatives, and independent technical experts to guide implementation, set realistic milestones, and resolve operational issues in real time.

Key measures proposed include:

• Scaling up silver AHC capacity and geographic coverage before full rollout.
• Prioritising high-volume clusters for early expansion to reduce travel times and costs.
• Considering weight-based exemptions or tiered fee structures for lightweight items.
• Streamlining BIS registration and record-keeping for small artisans and micro-enterprises.
• Exploring mobile hallmarking units or satellite counters to serve dispersed clusters.
• Phased enforcement with clear timelines to prevent supply disruptions and stockouts.

Balancing consumer protection and market realities

Mandatory hallmarking for gold has delivered measurable gains in transparency and purity assurance. Extending similar benefits to silver is a logical next step, given its popularity in jewellery and artefacts at lower price points. But silver’s scale, dispersion, and product mix demand a tailored, well-sequenced approach.

A carefully designed roadmap—backed by infrastructure augmentation, pragmatic exemptions, and strong industry–regulator coordination—can safeguard consumers without overburdening small workshops and retailers. With the right groundwork, the transition can enhance trust across the value chain while preserving the vitality of India’s silver craft ecosystem.