NEW DELHI, Feb 15: International Financial Services Centres Authority (IFSCA) Chairperson K Rajaraman on Thursday called for setting up of gold refining units in the country as India is a major buyer of the precious metal in the world.
He said that there is a scope for moving up the value chain in the sector besides being a trading hub of gold.
“Being a large buyer, there is a great opportunity to do the refining. India imports about 250 tones of dore for refining. I think, there is a case to look at whether refining can be commenced in the GIFT city as well. Enabling regulations are in place and if there are any further improvements required, we (can) look at that as well,” Rajaraman said.
He added that some tweaks to tax policies or customs tariffs might be required to facilitate that and “we shall definitely look at it”.
“So there is a case for refining in GIFT city,” he added.
He was speaking at a gold conference, organised by IIM Ahmedabad- IGPC (India Gold Policy Centre) here.
The IFSCA was established on April 27, 2020 under the International Financial Services Centres Authority Act, 2019. It is headquartered at GIFT City, Gandhinagar in Gujarat.
The IFSCA is a unified authority for the development and regulation of financial products, financial services, and financial institutions in the International Financial Services Centre (IFSC) in India.
At present, the GIFT IFSC is the maiden international financial services centre in India.
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 800-900 tonne of gold annually.
Rajaraman said that the authority is also working with the RBI on the gold metal loans and the leasing ecosystem. He also pitched for developing an index of financialisation of gold as it is an important commodity like land.
“…It (gold) is stuck in the cupboards of ordinary citizens…800 tonne stuck in RBI vaults…It is not circulated in the economy. How to effectively use it for the benefit of the economy? Are there any risks emanating from such huge reserves accumulating without being financialised? These are some questions which we need to answer,” he said adding circulation of this gold in the economy would help in adding value and creating jobs.
Further, he added that as India is such an important player in the gold and silver markets in the globe, “then I think we must be calling the shots” in the international market, but unfortunately, it’s not the case and that is a subject matter of research.
“What would it take to actually ensure that India calls the shots in the international markets? You are buying one fourth of the world’s gold and about 80 per cent of the world’s silver. I think, there must be certain levers that we are really not knowing or we are really not pulling, which needs to enable us to call shots in the global markets,” he said.
The chairman also pitched for integrating with global best practices such as responsible sourcing and good delivery systems.
“See how we can develop good delivery standards in India. We are a large buyer and we must have our own good delivery standards,” he said adding, “the role of GIFT city in the gold market will further improve, if we are able to provide delivery across major cities in the country”.
IGPC at IIM- Ahmedabad was set up in November 2014 with a grant from the World Gold Council. It conducts research on the gold Industry in India. (PTI)
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