Stating India as the land of gold would certainly not be incorrect. The demand of gold in the Indian markets is ever increasing. However, with a yearly demand of 800 – 900 tons every year, the Indian market is lagging behind.
According to the MD of Rajesh Exports, there are multiple factors that regulate the gold market. Numerous challenges faced by the industry, such as quality assurance, weak price transparency, fragmented liquidity and more act as barriers in the market.
A relief, the gold spot exchange policy is likely to help the market grow. With the policy in place, market associates will be able to buy and sell gold in trade plus 2 (T+2) markets. Other policies including Digital India, demonetization, Goods and Services tax, etc., will also aid the gold markets because of increased tax accounting in the nation’s economy.
Not only this, spot exchange is also anticipated to bring in the essential standards like gold delivery and price transparency. Moreover, it would also provide the MSME jewelers an easy pathway to trade. This will eventually benefit the complete supply chain.
With opacity prevailing in the gold market, it is expected that the Centre will bring out regulatory framework for spot gold exchange in this year. With an increasing demand for reforms that ease the gold markets in India, the industry is hoping that the Securities and Exchange Board of India (SEBI) will ease the course of gold trade in the country.
The launching of schemes, such as gold monetization, sovereign gold bonds and more by the government are also aiding in the entire process. The transformation of gold market, according to the MD of Rajesh Exports, is helping in gaining the participant’s trust. With the participants adopting international experiences. A transparent price detection mechanism is in order.
Also, spot exchange has the potential to bring all the key players in the gold market on the same platform. Organizing the unsystematic gold market, it will allow easy procurement and selling of gold without going through multiple layers and mediators.
Furthermore, the market is likely to witness an easy launching of gold-backed products by various financial institutions. The exchange will also facilitate the development of domestic refining and gold scrap market, firming the effect of gold in the international markets.
A blueprint for the spot gold exchange is being made in order to steer the development in the right direction. The blueprint will deliver what the industry expects for spot gold exchange.
The final call on gold spot exchange is expected to happen really soon. In consultation with the industry, it will help India build a robust spot trading exchange platform, making gold a true asset for the country.