Jewellery shops add wastage and making charges to cover the cost of turning raw gold into ornaments and to offset the small quantity that vanishes as dust or filings during crafting, but these percentages vary widely and invite misuse.
Why do jewellers talk about “wastage” at all?
Walk into any jewellery store and the salesperson quickly mentions two numbers in addition to the day’s gold rate: making charge and wastage. The term wastage sounds suspicious because no one hands the customer a packet of gold dust that was supposedly lost. In reality every stage of ornament production shaves off tiny particles. When gold bars are cut, melted, rolled, filed, soldered, and polished, microscopic flakes land in trays, on aprons, and inside suction ducts.
Large factories recover a good share of this residue by sweeping and refining, yet small workshops may not own the expensive equipment required for full recovery. That is why they pad the bill with a wastage percentage. A 2019 research paper published in the Indian Institute of Metals Journal measured losses between 2.4 and 4.1 percent for handmade bangles and chains, confirming that some loss genuinely occurs.
How much gold is really lost from molten metal to neck piece?
Field data collected by the Bureau of Indian Standards put typical physical loss below 5 percent for most machine made designs. Handmade filigree and stone-set necklaces have higher scrap because of repeated soldering and filing. The numbers in real shops, however, can shoot up to 15 or even 35 percent.
| Ornament Type | Production Method | Average Physical Loss | Common Wastage Charged |
|---|---|---|---|
| Plain wedding band | CNC machine | 1 – 2 % | 3 – 5 % |
| Rope chain | Machine with manual finish | 2 – 3 % | 5 – 8 % |
| Temple style necklace | Handcrafted | 4 – 6 % | 8 – 15 % |
| Kundan bridal set | Handcrafted with stones | 6 – 8 % | 12 – 25 % |
The rightmost column shows why customers grumble. The gap between actual loss and what gets billed is where excess profit hides. Jewellers argue they must add the cost of refining and the interest they lose while wastage gold sits in dust form. Critics reply that modern vacuum collectors bring recovery above 90 percent, shrinking the real loss to nearly one percent.
Making charge vs wastage charge: spotting red flags
Making charge is labour plus overhead: wages, rent, electricity, packaging, advertisement, and a healthy margin. Wastage is supposed to be only the offset for lost metal. Mixing the two, or inflating wastage beyond reasonable limits, is a classic red flag.
Some cues that should put buyers on alert:
- Flat percentage for every design: A delicate hollow chain and a solid coin do not vanish in the same way.
- Wastage quoted on selling price instead of weight: It should be tied to grams, not rupees.
- Reluctance to show breakdown on the invoice: A transparent bill lists gold weight, rate, wastage grams, wastage cost, making cost, and tax.
According to the All India Gem and Jewellery Domestic Council, fair wastage for machine made ornaments should rarely exceed 4 percent. Anything dramatically higher deserves negotiation or a walk-out.
Is 916 Hallmark foolproof?
Hallmarking, introduced by the Bureau of Indian Standards in 2000, certifies that gold purity is 91.6 percent for 22-carat pieces. The process costs the jeweller roughly 25 rupees per item, as stated in the BIS fee schedule effective April 2023. Customers assume the stamp removes all doubt, yet bribery and off-site stamping do occur.
| Step in Hallmark Chain | Official Fee (₹) | Weak Spot That Allows Misuse |
|---|---|---|
| Jeweller submits piece to BIS centre | 2 for registration | Middlemen can substitute similar looking piece |
| Testing and laser marking | 23 | Lab staff can be pressured to relax traceable records |
| Random market surveillance | Included in above | Limited manpower means few surprise checks |
The Consumer Protection Act empowers states to raid stores and impose five-year imprisonment for cheating on purity, but enforcement teams remain thin. Until inspection frequency rises, hallmark should be seen as a good filter, not a guarantee.
How to negotiate and protect yourself when you buy gold
Many buyers assume charges are cast in stone; they are not. Reputed chains and family run stores will cut wastage if you ask politely, especially on heavier orders. Consider the following checklist:
- Compare at least three stores on the same day.
- Ask the salesperson to show designs marked “machine finish” because they carry lower wastage.
- Request wastage in grams, not percent, then multiply by the metal rate yourself.
- Bargain on making charge; even a drop of two percent on a 10-sovereign chain can save several thousand rupees.
- Pay attention to return policy. If the store promises buyback at current rate minus three percent, your net cost stays reasonable.
- Keep invoice, hallmark card, and photos of weight stamp for future sale or exchange.
Following these steps shifts power back to the customer.
What other countries do and what India can learn?
In the Gulf, jewellers quote only making charge. Physical loss is already baked into this figure and rarely exceeds 7 percent of the total bill, according to the Dubai Gold and Jewellery Group. Singapore follows a similar model. The United States sells branded pieces at fixed labour margins; wastage is an internal factory cost, not a customer line item.
The Ministry of Consumer Affairs floated a draft rule in 2022 suggesting that wastage be renamed “conversion charge” with a cap linked to design complexity. Industry bodies pushed back, saying a blanket cap ignores reality in artisan clusters like Nagercoil. A more balanced solution could be tiered ceilings: two percent for cast pieces, four percent for semi-handmade, eight percent for fully handcrafted. Transparent billing plus digital records would keep both sides honest while still rewarding craftsmanship.
Frequently Asked Questions about gold wastage charges
Why do gold shops in India charge both wastage and making charge?
They separate the unavoidable metal loss during crafting from the labour and overhead cost, but many shops blur the line, which inflates the bill.
Is wastage charge illegal in India?
No law forbids it, yet the Consumer Protection Act calls any hidden or misleading fee an unfair trade practice. You can file a complaint if the bill lacks clarity.
Can I recover the wastage amount when I resell the jewellery?
Most stores do not refund wastage. They usually deduct a small service fee and pay the prevailing gold rate for net weight, so wastage is effectively a sunk cost.
How much wastage is acceptable on 22-carat bangles?
Industry surveys show physical loss of about three percent for bangles. If a shop demands more than seven percent, you should negotiate.
Does hallmarking affect wastage charges?
Hallmarking only certifies purity. It does not control wastage, but a shop that follows hallmark norms often has better transparency overall.
Are machine made chains always cheaper to make?
Yes, mass produced chains have lower labour input and tighter recovery systems, so wastage should be between two and four percent.
What happens to the gold dust collected in workshops?
Large retailers send sweepings to refiners who melt and purify the dust into bullion. That recovered gold reenters production, boosting profit margins.
Wrap-up
Gold wastage exists, but sky-high numbers thrive on customer ignorance. Compare stores, bargain hard, and ask for a detailed invoice. If you found this guide helpful, share it with friends and drop your questions in the comment box below.
