World Gold Council, FICCI recommend creation of India Gold Exchange

The Dollar Business Bureau

Gold demand in India is not dependent on price fluctuations. In a survey conducted by WGC and FICCI, 19% of respondents said they would buy more gold if prices rose while just 6% said they would sell

  The Federation of Indian Chambers of Commerce and Industry (FICCI) and the World Gold Council (WGC) have made several recommendations including the creation of an India Gold Exchange and the establishment of a Gold Board to help the government manage imports and boost exports while improving price transparency. In a report, “Why India needs a gold policy”, published today, FICCI and WGC have made seven recommendations for an effective Gold Policy in India. The report says that an Indian Gold Exchange can help pricing standardisation and improve supply and demand analysis, while a Gold Board can be established to manage imports, encourage exports and facilitate development of the infrastructure needed to ensure the Indian gold market functions to maximum effect.  The report says that in order to improve the quality and customer trust, the government should develop accredited refineries which follow international standards and make quality certification compulsory for all forms of gold. The report also says that India needs to improve its marketing strategy for Indian handcrafted jewellery. “This could boost exports and highlight India’s expertise in this highly-valued sector e.g. by promoting handcrafted ‘India-made jewellery’ like the Swiss-made watches,” it says. However, the primary aim of the recommendations are focused on the monetisation of India’s large stock of household gold. According to the World Gold Council, India holds around 22,000 tonnes of gold valued at over a $1 trillion, which has accumulated over the centuries. The report says that banks must be allowed to use gold as part of their liquidity reserves and efforts must be made to drive monetisation of gold through banks. Somasundaram PR, Managing Director, India, World Gold Council said, “We believe the solution to meeting India’s enduring appetite for gold lies not in restricting the import of gold, but in making better use of the gold that is already in the country, making it a productive fungible asset class like any other financial savings.” Dr. A. Didar Singh, Secretary General, FICCI, urged the government to develop a comprehensive gold policy. “Through this report we have re-examined many assumptions around gold and have also suggested ways of monetising this asset. We hope that this report will form the basis for formulating a comprehensive public policy on gold," he said. Gold is one of the top imports by India, standing at around $14.6 billion in April – September 2014, which is about 6% of $233.8 billion of total imports by India in the same period.  

This article was published on December 9, 2014.