India’s First International Bullion Exchange Launches In Gujarat

India imported 1,069 tonnes of gold in 2021, up from 430 tonnes a year ago. The yellow metal is tightly regulated in the country and currently only nominated banks and agencies approved by the Reserve Bank Of India can import gold and sell to dealers and jewellers.

Ahmedabad: Prime Minister Narendra Modi launched ‘India International Bullion Exchange (IIBX)’, the country’s first international bullion exchange near Gandhinagar, on Friday. As world’s second biggest consumer of gold, the move is seen as India’s effort to bring transparency to the market for the precious metal. Setting up of IIBX, which is based at Gujarat International Finance Tec-City, or GIFT City, could lead to standard gold pricing in India and make it easier for small bullion dealers and jewellers to trade.

“We would have better price negotiation strength with the launch of this bullion exchange,” Finance Minister Nirmala Sitharaman said after the launch.

The exchange is expected to facilitate efficient price discovery with the assurance of responsible sourcing and quality, apart from giving impetus to the financialisation of gold in India.

India imported 1,069 tonnes of gold in 2021, up from 430 tonnes a year ago. The yellow metal is tightly regulated in the country and currently only nominated banks and agencies approved by the Reserve Bank Of India can import gold and sell to dealers and jewellers.

“IIBX with its technology-driven solutions, will facilitate transition of Indian bullion market towards a more organised structure by granting qualified jewellers a direct access to import gold directly through the exchange mechanism,” the exchange said in an official statement.

Currently, the Multi Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX) offer gold futures contracts in India, but till now, there was no physical exchange to buy gold.

“India’s efforts to monetise gold will also derive tremendous support from a transparent bullion trading system in GIFT City,” said Somasundaram PR, regional chief executive officer of WGC’s Indian operations.

Indian households own an estimated collective 25,000 tonnes of gold, which passes from one generation to the next. The government has been trying to monetise these holding to reduce the imports, according to a report by Reuters.