New Delhi, Sep 2 (IANS) The Bureau of Indian Standards (BIS) plans to set up 500 surveillance centres in all major cities of the country to monitor the quality of gold and silver jewellery.

Inaugurating the Associated Chambers of Commerce and Industry's (ASSOCHAM) second international gold summit here, Minister of Company Affairs P.C. Gupta Saturday said it had come to the government's notice that jewellers were selling sub-standard jewellery to millions of consumers.

"The Department of Company Affairs has asked the BIS to set up 500 surveillance centres all over the country so that no cheating takes place. These centres would shortly become operational," he added.

He said the BIS had already found sub-standard products from various shops in Hyderabad, Kolkata and Jaipur.

"The nationwide BIS operations showed that 88 percent of shops, whose jewellery was tested by the inspectors, failed to follow purity levels. This kind of distortion is not going to be tolerated and, therefore, the government will set up centres to protect the millions of people in India who invest in gold and silver," Gupta said.

He also said his ministry would impose penalties against firms violating corporate governance rules to cheat small investors. The minimum penalty will be Rs.100,000.

Bakul R. Mehta, chairman of the Gem and Jewellery Export Promotion Council, said that out of 4,036 tonnes of gold, 2,712 tonnes were used for jewellery fabrication in 2005.

Jignesh Shah, managing director of MCX, a commodity trading body, said that gold trading, on an average, had reached about Rs.65 billion a day as against Rs.35 billion two months back.