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Govt wants India gold exchange

As refining picks up, govt seeks to promote exports

Rajesh Bhayani & Dilip Kumar Jha  |  Mumbai 

A file photo of Shaktikanta Das
A file photo of Shaktikanta Das

India might see its first exchange soon. The trading platform would be made available for all types of bullion dealers, jewellers, bullion refineries, individuals, and even temple trusts. This could be seen as a significant move to discover standard prices in the country. The proposal to set up the exchange was made by Shaktikanta Das, secretary, department of economic affairs in the finance ministry, on Friday when he interacted with jewellers and stakeholders in the bullion sector during a meeting of jewellers and bullion sector stakeholders. He has asked industry to come out with a concrete proposal for this. In major like Turkey and China, such exchanges have played a major role in developing the bullion sector. Speaking at the Third India International Bullion Summit here on Tuesday, Das said, “Can we think of a exchange where there can be transparent trading? Those who have surplus can sell it to those in its requirement. There is a jeweller who needs temporarily. So instead of its import, he can purchase it locally.” While the government has not spelt out its mind on this, experts believe it will most likely be an electronic platform for giving and taking physical delivery, like a spot exchange where agri-commodities are traded but under strict regulations.

  • There are two major spot exchanges for trading globally
  • Istanbul Exchange of Turkey was set up in 1993 by its central bank which also oversees private import of Turkey has set an example for successful monetisation
  • Shanghai Exchange was set up 13 years ago. It is also a clearing exchange for OTC trades and regulates business
  • In India there are some online spot trading platforms for gold, but they are not regulated
  • futures are very vibrant in India, with MCX as a market leader and hedging and deliveries taking place there. However, FICCI and WHC had recommended exchange for spot trading two years ago
The proposal for such an exchange was made by Ficci and World Council in December 2013.

The report prepared by them said, “The buying or selling of in India takes place through many channels, formal and informal. Prices vary across both channels and regions and arbitrage is high. A dedicated institution like a exchange focused on trading will create a national pricing structure for and create required infrastructure including storage.” Shanghai Exchange was set up in 2002. It is the world’s largest and the market in China is regulated by it. Istanbul Exchange in Turkey has helped improve infrastructure significantly there. Turkey has set an example for successful monetisation. Somasundaram P R, India managing director, WGC, said, “Discussion in India on how can help the economy is healthy and idea of exchange should be examined by the sector as it will improve price transparency and improve gold-related infrastructure in India and bring over-the-counter trades on the exchange’s platform.” Mohit Kamboj, president of had preferred setting up a bank dedicated to the needs of the bullion sector. But, the government has not favoured this idea. “exchange can be set up by government-owned banks or institutions or the RBI may allow private sector shareholders, subject to regulations which will be prepared. As refining is increasing in the country, with 30 per cent of imported being refined in India, the government wants to promote export of and a exchange would be a platform for buying which can be exported and it can also declare refined in India as good delivery,” said an observer.

First Published: Tue, December 01 2015. 22:50 IST