Money & Banking

Bullion exchange fails to cheer jewellery industry

Mumbai | Updated on February 02, 2020

The proposed bullion exchange at Gift City in Gujarat may not offer much relief to the bleeding jewellery industry, which was hoping for a cut in high import duty of 12.5 per cent and some positive measures.

V Balasubramaniam, Managing Director and CEO, India International Exchange, said that India INX is keen to set up the International Bullion Exchange at GIFT IFSC, besides rupee-dollar futures and options contracts trading as soon as approvals are received from the regulators.

The announcement to reduce the withholding tax from 5 per cent to 4 per cent for IFSC Exchange-listed bonds will be an immense boost to issuers and will help in attracting more international investors, he said.

Chirag Mehta, Senior Fund Manager, Alternative Investments, Quantum Mutual Fund, said though the Finance Minister has proposed that GIFT City would set up an international bullion exchange as an additional option for trade by global market participants, she had failed to provide a roadmap to set up a gold exchange, which was the need of the hour, as many of the key market players are currently underserved by the current market structure.

The idea of international bullion exchange should act as an extension of the spot gold exchange proposed late year and allow participation from all players in the Indian gold ecosystem into relevant instruments that help bring transparency and efficient price discovery, he said.

The success of the international bullion exchange would depend on theopen and free participation of key players in the gold value chain. It should be well regulated and have clear and well defined rules of operation, facilitate imports and transfer to local markets, assurance on quality, lending and borrowing mechanisms and tax efficiency to be successful in fulfilling its intended role, said Mehta.

Sriram Iyer, Senior Research Analyst, Reliance Securities, said though plans to set up bullion exchange at Gift City in Gujarat is positive, it will not have an impact on gold prices.

Published on February 02, 2020

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