India Unveils First Transnational Bullion Exchange Aimed at Fostering Transparency

Last week, the Prime Minister of India, Narendra Modi, launched the country’s first global bullion exchange in an effort to facilitate transparency within the precious metals market. This will make it easier for small jewelers and bullion dealers to trade in the market and lead to uniform pricing for gold in the country.

In a statement at the inauguration, Modi said that India was laying strong claim in the global financial services sector through this exchange launch. While the National Commodity and Derivatives Exchange and the Multi Commodity Exchange provide gold futures contracts in India, there wasn’t any physical exchange to purchase gold — until now.

India is currently the second-largest consumer of gold globally. Its bullion exchange, dubbed the India International Bullion Exchange, will sell physical gold and silver. It will be based in GIFT City in the western region of Gujarat State.

Nirmala Sitharaman, the country’s minister of finance, stated that the launch of the bullion exchange was a major step and would afford India better strength for price negotiation globally. Currently, gold is strictly regulated in the country, with only nominated agencies and banks that are approved by its Central Bank being allowed to import gold into the country and sell it to jewelers and dealers.

In a statement, the exchange stated that with its technology-based solutions, the India International Bullion Exchange would facilitate the shift of the country’s precious metals market toward a structure that was more organized by giving qualified jewelers unfettered access to gold imports through the mechanism created by the exchange. Jewelers with a net worth of Rs 25 crore ($3.17 million) and more will be allowed to participate in the exchange. Institutes and NRIs will also be allowed to participate in the exchange after they register with the International Financial Services Centre Association.

The biggest consumer of gold currently, China operates a market where all imported and domestically produced gold can be sold and bought.

Last year, India imported roughly 1,070 tons of gold, which is an increase from its 2020 figure of 651 tons. Somasundaram PR, the regional chief executive officer of the World Gold Council in India, stated that the country’s moves aimed at monetizing gold would also gain support from the transparent trading system of bullion in Gujarat International Finance Tec-City.

Households in India own approximately 25,000 tons of gold collectively, which is passed from generation to generation. For a while now, India has been working toward monetizing these holdings in a bid to decrease imports.

This bullion exchange is likely to give entities such as Hecla Mining Company (NYSE: HL) an additional platform where they can sell their gold in this major market in India.

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