Winning Bizness Desk

Mumbai. It is going to be easy for Indian jewelers to import gold from abroad as Prime Minister Narendra Modi has launched India's first International Bullion Exchange. PM launched this exchange at International Finance Tec-City (GIFT City) near Gandhinagar. This exchange will sell physical gold and silver. This exchange has been set up on the lines of Shanghai Gold Exchange and Borsa Istanbul, which will give India a strong position as a regional hub of bullion. The exchange has been launched after a delay of over a year, several trials and dry runs.

What is bullion exchange ?

Bullion refers to physical gold and silver of high purity, held in the form of bars, ingots or coins. Bullion can sometimes be considered legal tender. It is often kept as gold storage by central banks or by institutional investors. The import of gold from nominated banks and agencies was liberalized in the 1990s. After that for the first time some jewelers in India were allowed to import gold directly through IIBX. So this exchange itself is quite useful. For this, the jewelers need to be a trading partner or client of an existing trading member. The exchange has put in place the necessary infrastructure for the storage of physical gold and silver.

What will be the benefit?

IIBX's growth will not be limited to GIFT City only, but will extend to all jewelry manufacturing hubs across the country. Eligible jewelers will be allowed to import gold through IIBX. Client jewelers of IIBX member will have this facility. Jewelers can view available stocks on the exchange and place orders. This will make the inventory management of jewelers much easier. This will bring a lot more transparency in price and order sequencing. Along with this, the cases of wrongly giving preference by the supplier or the logistics agency will also end.

What was the scene till now ?

Presently, gold was imported into India on a consignment model from designated banks in several cities and agencies recognized by the RBI. This was then supplied to the traders/jewellers. Banks and other agencies get tax from gold exporters for handling, store. The premium is also added to the gold while transacting with the home buyers. The buyer transfers this fee up the value chain until it reaches the end customer. With IIBX operational today, eligible domestic buyers can purchase bars and coins from an international supplier who will be a member of IIBX with them through a branch in GIFT City.