India on Friday launched its first international bullion exchange, as the world’s second largest consumer of the precious metal seeks to bring transparency in the market for the precious metal.
Gujarat International Finance Tec-City, or the India International Bullion Exchange (IIBX) based at GIFT City in western Gujarat state, could promote standard gold pricing in India and make it easier for small bullion dealers and jewelers to do business .
India’s Finance Minister Nirmala Sitharaman said, “With the launch of this bullion exchange, we will have better price negotiation power.”
Gold is strictly regulated in India and currently only designated banks and agencies approved by the central bank can import gold and sell it to dealers and jewellers.
“IIBX, with its technology-driven solutions, will facilitate to move the Indian bullion market towards a more organized structure by providing qualified jewelers direct access to import gold through the exchange mechanism,” the exchange said in a statement. “
China, a top consumer of gold, operates a stock market where all domestically produced and imported gold is bought and sold.
India imported 1,069 tonnes of gold in 2021, up from 430 tonnes a year ago.
The Multi Commodity Exchange (MCX) and the National Commodity and Derivatives Exchange (NCDEX) offer gold futures contracts in India, but there was no physical exchange to buy gold.
“India’s efforts to monetize gold will also be strongly supported by a transparent bullion trading system in GIFT City,” said Somasundaram PR, regional chief executive officer of WGC’s India operations.
Indian households hold an estimated collective 25,000 tonnes of gold, which is passed down from one generation to the next. New Delhi is trying to monetize these holdings to reduce imports.