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Mr. J K Dadoo is Additional Secretary & Financial Adviser, Ministry of Commerce & Textiles, Government of India.


                        Gold and Jewellery Summit was held in Vigyan Bhawan on the first day and Ashoka Hotel on the second day where all stakeholders dealing with gold were present.  On the "Gold Policy Focus" session where I was one of the speakers, several issues were raised by the learned speakers. Finance Secretary, and CEO of World Gold Council Mr. Aram Shishmanian also spoke eloquently on the occasion.

            Chairman, GJEPC Mr. Pandya underlined the need for MEIS for the gold sector. The World Gold Council CEO, highlighted the fact that India constitutes 25% of world gold demand, and had estimated hoardings of gold of 23000 tonnes. He emphasized 4 main issues namely


Common Market - need for hallmarking, timely delivery, transparency in all operations and fair dealings in the market.

Organized Market - need for spot exchange, bullion trade, adequate banking services, accredited refineries and better logistics.

Household Financial Security - need for gold monetization, investment products, Ubiquitous access to certified gold and integration of gold in the financial system.

Employment and Economic Growth - Need for innovation in jewellery design, focus on exports, sale of Indian gold coins and skill development.


            Mr. Koker, Head of the Turkish Treasury outlined the new investment instrument started by Turkey which has netted 6.5 tonnes of gold so far.  Revenue Secretary's intervention included removal of any policy neglect in the gold sector and Government's intention to incentivize exports of gems and jewellery. He also highlighted that GST and demonetisation are two structural reforms which have curtailed the parallel economy.


            Representing the Commerce Ministry and answering the queries of the stakeholders, I spoke about 12 essential matters relating to Gold in India.


1.         Gold Exchange : A study done by IIM, Ahmedabad shows that a gold exchange needs to be set up in India with gold vaulting facilities. Delivery should be at least 21 major locations in India the next day, to establish credibility of the exchange and enhance its overall significance. According to the study, nearly 100 tonnes of gold can be traded annually, which will be vital to convert the stock of gold into a transactional flow.

2.         Converting stock of temple gold into flow : India is the second largest market for gold with an average annual import of about 500-600 tonnes valued at $ 30 billion. To convert stock of gold into a flow, 3 Government schemes were announced last year namely gold monetization, sovereign bonds and gold coins. However, success has been limited due to practical and implementation challenges.

            The largest stock of gold in this country is estimated to be in the hands of the top 100 temples of the country estimated to the tune of nearly 10000 tonnes over the last 100 years. The top 10 temples get an estimated donation of Rs.100 crores annually of which 10% is in the form of gold or silver jewellery. Because of the fear of tax authorities, specially with regard to the source of this donated gold, it is lying in the vaults of the temple trusts or in the vaults of the banks and remain as a stock with no transactional value as a flow.

            To convert this large stock into a perpetual annual flow, an expert team led by Joint Secretary in the Ministry of Finance, with a member each from RBI, SBI and CBDT, can visit each of these top 100 temple trusts over a year. They can win their confidence, assuage their fears and enlist their support with assurance that the trust will not be harassed and the gold source will be taken as public donation only. If even 5 tonnes of gold is released by the 100 top temple trusts annually, it will result in 500 tonnes of gold stock getting converted into a flow annually. This will allow a locked valuable resource to become available for recycling through banks and jewellers. It will be at no extra expense to the exchequer and will meet the huge domestic demand causing a win-win situation for the temple trusts, the banks, the jewellers, the Government and the public at large. Hoarded gold wealth will then replace large scale gold imports.

3.         Hallmarking centres :   Hallmarking centres instil confidence in the public and lead to more informed purchases. There are presently only 300 such centres while gold jewellery is sold in 7000 towns in India. There is, therefore, an urgent need to enhance the number of hallmarking centres from 300 to at least 1000.

4.         Design Intervention :    A bilateral MoU has been signed between India and Italy recently for Italian assistance in design space. GJEPC should tap into this institutional framework and get the best of Italian designers to assist our trade and industry. At present, design courses in NIFT and NID are largely in textiles and leather and hence there is a need to include jewellery design in all the 16 campuses of NIFT and 4 campuses of NID, so that a cadre of jewellery designers can be created for our vibrant gold jewellery sector. Target of exports of $ 20 billion or 3 times the present exports, by 2022 will require enhanced design capabilities.

5.         GST refund to foreign tourists :            Gold jewellery bought by foreign tourists, as also handicrafts and textiles, should be allowed GST refund. At present there is no mechanism, but like foreign airports, Customs should create a mechanism to provide refund of GST, on purchases made by foreign tourists in foreign exchange in India, at 10 major international airports. This will boost purchases by foreign tourists, of all items including jewellery.

6.         Exports Strategy :        While GJEPC is targeting exports of $ 20 billion by 2022 and $ 25 billion by 2025, GJEPC needs to craft an exports strategy to ensure that the entire Indian Diaspora spread over the world is covered. Also many emerging markets in CIS countries, Latin America, Middle East, South East Asia and Africa are also given due attention to boost exports of Indian jewellery.

7.         Jewellery Parks :          Jewellery parks is a demand of the stakeholders and can be easily met if such parks can easily be started in the SEZ where 30% domestic tariff area is also allowed. GJEPC needs to apply for such parks in the SEZ, to the Department of Commerce, after assessing the desired location for the same.

8.         Common Facility Centres :       4 such state of the art facilities have already been created and another 8 are being planned in the next 2 years, fully funded by the DoC. There are total of 20 clusters in India and the remaining 8 will also get covered in the next 3-5 years.

9.         Factoring         :           ECGC which is tasked with the service of factoring or monetising the accounts receivables of exporters, had stopped this service because of a major fraud few years ago. ECGC has re-started the factoring services, which should be availed by the jewellery exporters, and GJEPC should promote this facility among all its members.

10.        MEIS    :           Estimate of the funding requirements of any MEIS proposal needs to be made and submitted to the Commerce Department for assessing and examining it. So far gold has never been covered in the MEIS policy.

11.        MMTC :            MMTC is going to start e-commerce facility for sale of Ashoka Emblem gold coin which were minted last year. This will be a new marketing avenue for MMTC, and a convenient purchasing mechanism for the general public.

12.        Gold Refineries :          Need to set standards for all gold refineries in India is paramount. This will ensure that their output is certified, and this will instil confidence in the minds of gold dealers and the general public.


            Commerce Ministry sees a bright future for the export of gold jewellery and is ready to support, the achievement of the target of exports of $ 20 billion by 2022. GJEPC needs to professionalise its entire structure, and work on all the above points with full dedication, so that the targets set for all its members, are met fully. A lot will finally depend on the recommendations of the NITI Ayog for a comprehensive gold policy in India. GJEPC should submit all its relevant inputs to NITI Ayog, so that a holistic assessment can be made, of the action plan that will orchestrate the development of the gold sector in India.


Disclaimer: Views are personal and not the views of the publisher.