Gold import via GIFT City exchange in next phase
The Budget announcement to allow a spot global bullion exchange at the International Financial Service Centre (IFSC) at GIFT City near Gandhinagar has generated ripples in the trade.
Participants expect this to pave the way for domestic physical trading in gold and silver on the exchange platform.
The global bullion exchange mentioned by the finance minister is expected to be operational in the coming financial year. The priority now is a unified regulator for the IFSC. In the second phase, the exchange at GIFT City may be allowed to be used as a medium for import of gold in India.
As of now, a domestic spot gold exchange is unlikely to be considered, according to an industry veteran connected with the developments.
All this is expected to catalyse an exchange-related ecosystem, such as testing labs, vault companies and warehousing. Two internationally renowned warehousing companies have already got a licence for providing vault facilities. A gold testing laboratory is a must for checking the metal purity and the next step will be to permit gold refineries in GIFT City, to process imported dore and sell on the exchange.
A ROLLER-COASTER RIDE
Gold: $/Oz
Close 1,595 1,590 1,585 1,580 1,575 1,570
It could also promote export of gold bars, which is unviable under present rules, where the value addition mandate is for 1.5 per cent. Globally, bars are traded with a 0.5-0.7 per cent margin.
“Export of bars from GIFT City will be a new opportunity for India,” said an industry observer.
Somasundaram P R, MD of the India arm of the World Gold Council, the entity established
THE BLUE PRINT
Operationalising GIFT regulator is priority
New regulator will prepare regulations for the exchange
Two vault companies have already been given licence
The exchange expected to go live in FY21
by mining companies to promote gold, said: “With its unique locational, infrastructural and regulatory advantages as an IFSC, GIFT City is well-placed to build a fair, efficient and transparent bullion trading ecosystem. An organised bullion trading system will benefit the entire supply chain, particularly small players and exporters.”