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India Gold Policy Centre @ IIMA: The Journey So Far in Gold Policy Making


Sudheesh Nambiath, Head India Gold Policy Centre@IIMA


India Gold Policy Centre was created as a think tank with the vision to impact policies and practice in the gold ecosystem through research, engagement, policy recommendations and training. We are now in its fifth year since the inception of the IGPC. A lot more is to be accomplished for designing a novel landscape of India’s gold sector and carve out a niche in the global gold industry. IGPC shoulders the responsibility of functioning as a beacon for India’s gold industry but this is possible only with collective efforts of all stakeholders to transform it into a sustainable transparent ethical ecosystem.

The India Gold Policy Centre (IGPC) has worked closely with the government and the industry for providing meaningful policy advisory for mapping all segments of the gold value chain for a uniform reform impact. With the accentuation of deliberations in global conventions, proactive stance of policy makers and stakeholders in the value chain, the winds of change have become significant ingredients deliberated on at the Centre. Striving to transform India’s gold market is central to the vision of IGPC.

When we started chalking out the plan for need to create a revamped gold policy, much of the focus or discussion was centered on Gold Monetisation Scheme, gradually moving to Spot Gold Exchange for India, standardization, bullion banking and retail investment products. Last year, we culminated our thoughts into a policy report as “Defining a new era for Indian gold trade”, which largely was about defining the five key pillars of the policy and explaining how each of these are to be developed and integrated. This was followed by various one-to-one deliberations with the policy makers, re-working and detailing specifically on the regulatory aspects of the reforms.


At IGPC policy is at the forefront and creating a positive impact on economy through formalizing the gold trade is the principle goal. The reforms success rests upon an architecture where each part of the value chain is interconnected and the regulatory machinery works in a way such that it helps the industry evolve over a period of time and add value to economic activity. Given the limitation to which we can disclose our work, have touched upon briefly the five pillars on which we reckon the policy is to built


a.     Precious Metals Board / Gold Board: The new policy framework covers broader aspect of gold markets and is not limited to just one part of the value chain. The complex structure would require an independent regulator to oversee not just the trading on spot exchange but also to implement standardization with respect to gold refining, vaulting requirements, responsible sourcing guidelines and various investor education activities. Not limiting to it, this would also work closely with other regulators.

b.     India Good Delivery Standards: Various structural changes are required to bridge the gap in the current Indian accreditation policies and practises. There are reportedly wide gaps in the processes within the Indian gold refining industry starting with the sourcing of gold, ensuring traceability of the origin, refining process, and even the final refined metal. It is easy to agree upon that a brand can be priced higher or lower not just basis demand-supply dynamics but because of the reputation it holds in the market.

c.     Gold Monetization Scheme: A successful Gold Monetization Scheme (GMS) needs to have interventions from the viewpoint of a taxation, cultural, marketing, good delivery standards, design and operational aspects of a collection centre, jewellers, refiners and the banks who ultimately take the price exposure.  Making changes in 2-3 areas would be ineffective, as indeed has proved to be the case with the Gold Monetization Scheme where the total gold collected since launch is only 15.5 tonnes, which is less than 0.2% of the total estimated private gold in the country.

d.     Spot Exchange: A Spot Exchange helps create a common platform for purchase and sale of standard gold bars. It acts as a pooled account for both imported gold and domestically refined gold, the pricing of which will be based on domestic demand and supply. However, to make it successful liquidity in the official physical market is one of the critical success factors as it shouldn’t get to a point where gold is imported through a spot exchange and finds its way into the unorganised market. This requires creating a strong incentive mechanism to attract all the physical trade into the spot exchange. Some of these incentives can take the form of tax, bank financing, lower transaction costs, inter-operability amongst registered vaults, to name a few.

e.     Bullion Banking: The foremost requirement while we discuss about building the market infrastructure is developing liquidity in the physical market. This requires upping the game for banks from being a nominated agency by RBI to import gold on behalf of industry to that of a bullion bank. This would mean enable banks source locally, do inter-bank dealing, export bullion, transfer ounces to the counter party international bullion bank, allow opening of unallocated accounts, trading in dematerialised gold, hedge in domestic and international exchanges and finance refiners by sourcing dore.  While these are allowed equally important to create clearing system, push through standardisation of physical gold that are to be traded, increase vaulting infrastructure. These are also integral to the success of Gold Monetisation Scheme.


A phase wise implementation of these could bear results such that the trade is well interconnected and enhances growth opportunity across the value chain. The Gold Policy Wheel as given below is our pictorial representation on the benefits and impact it can have on the economy at large.

If one is to ask where we stand now with respect to the reforms, we think it is not far when we see the rollout of reforms happen.

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