What’s next for India’s gold exchanges

What will the new bullion exchange do?

All bullion imports into India for domestic use will be done through IIBX. Qualified Jewelers with Net Worth 25 crore and earn 95% of their revenue from jewellery, and NRIs with net assets of $500,000 can trade in IIBX, provided they wish to take physical delivery of gold. The hope is that all small gold dealers and jewelers will be connected to this transparent platform, which will provide efficient price discovery and quality assurance, and enable greater integration with other segments of the financial markets. Establishing India as a major gold player in the world is as big a goal as it may seem.

What was the need of setting up IIBX?

Currently, Indian jewelers and dealers are required to use the services of Reserve Bank of India authorized banks and designated agencies to import gold. But not all jewelers can access these channels, which affects the quality of gold. About India’s Gems and Jewelery Industry 7 trillion, and 90-95% of it is made up of micro, small and medium enterprises. Despite being second only to China in gold consumption, India has no significant role to play in influencing its pricing, rather than relying on the London Bullion Market Association (LBMA), according to the Securities and Exchange Board of India’s white paper. Not there.

What was the origin of the idea of ​​Gold Exchange?

In January 2017, Prime Minister Narendra signaled the need to make India a price-setter for securities and commodities, in which India is a major player. In May 2018, a NITI Aayog report mooted the concept of bullion exchange in GIFT IFSC. The exchange was announced in the Union Budget 2020-21, the rules notified in December 2020 and a pilot was launched in August 2021.

How will the bullion exchange work?

Indian and global Vault service providers have established or are setting up facilities at GIFT-IFSC. Imported gold will be kept in these safes, against which electronic gold receipts will be generated. These receipts will be listed and traded on the exchange; Market participants can take delivery of physical gold in exchange for these receipts. Trades are exempt from local duties, as long as the goods are not moved out of Gift City. Since its launch, 2 August saw trading for 20 kg of gold with a turnover of just $1.1 million.

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