The Indian Bullion and Jewellers Association has shown keen interest to launch India’s first spot gold exchange after the idea was mooted by Shantikantha Das, Secretary, Economic Affairs at an industry event recently.

Speaking to BusinessLine , Surendra Mehta, Secretary, Indian Bullion and Jewellers Association, said lot of discussions are going on since the idea was proposed by Shantikantha Das, but there are many issues that needs to be sorted out before a clear plan is drawn.

“First and foremost is whether the government will allow an industry body like us to launch a spot exchange. The proposal to operate an exchange also requires various regulatory approvals. It is going to be a time-consuming effort,” he added.

Addressing the third India International Gold Summit recently, Das urged the industry to deliberate on the idea of a gold exchange where a consumer can sell their gold coins and jewellery and at the same time jewellers can source their precious raw material from the exchange.

This will not only cut down on the industry dependence on imports for sourcing gold, but also provide a transparent platform for consumers to part with their gold ornaments, he said, and urged the participants of the summit to dwell on the idea and submit a concept paper which can be considered by the government.

At present, Multi Commodity Exchange and National Commodity and Derivatives Exchange facilitate trade in gold futures contracts, but the volumes have shrunk due to the levy of commodity transaction tax in 2013.

With the imposition of CTT, the impact cost of hedging gold in India increased than that of Chicago Mercantile Exchange and drove away liquidity to offshore.

In fact, Dubai Gold and Commodities Exchange launched a replica of MCX contract to attract trade from India. This apart there has been a sharp increase in informal dabba trading due to import restrictions and 10 per cent import duty.

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