- Date : 02/08/2022
- Read: 3 mins
IIBX will help in efficient price discovery of bullion. It will give an impetus to the financialisation of gold in India.
On 29th July 2022, PM Modi launched the India International Bullion Exchange (IIBX), based in GIFT City, Gujarat. In this article, we will explore what the IIBX is and how it works.
What is the IIBX?
The IIBX is India’s first international bullion exchange that will facilitate trading in bullion. Physical gold and silver of high purity, usually kept in the form of coins or bars, are referred to as bullion. Bullion is often held by many central banks across the globe, including the Reserve Bank of India (RBI).
The following five entities have promoted the IIBX:
- National Stock Exchange (NSE)
- Central Depository Securities (India) Limited (CDSL)
- National Securities Depository Limited (NSDL)
- Multi Commodity Exchange (MCX) and
- India International Exchange Limited (India INX)
How will IIBX work?
The IIBX will facilitate the efficient price discovery of bullion. It will also give the assurance of responsible sourcing and quality of gold. The IIBX will offer trading in two bullion products to start with:
- Gold 995 (1 kg gold with 995 purity) and
- Gold 999 (100 grams gold with 999 purity)
The exchange will collect the 100% payment in advance in US Dollars. Qualified jewellers can place orders for gold imports. A qualified jeweller is one who has a minimum net worth of Rs. 25 crores. The imported gold will be stored in vaults. It can then be used for domestic consumption.
Who will head the IIBX?
IIBX will be headed by Ashok Gautam, CEO and MD. As per the Times of India, Ashok Gautam wants to position IIBX as one of Asia’s biggest bullion trading hubs. He wants to attract international players using IIBX’s competitive pricing. The IIBX will be regulated by International Financial Services Centres Authority (IFSCA).
Tax incentives for IIBX market participants
The Government has allowed the following tax incentives:
- Nil customs duty on bullion imports into GIFT SEZ
- Nil commodities transaction tax
- Nil securities transaction tax
- Nil short-term capital gain tax
- Nil long-term capital gain tax
- Nil dividend distribution tax
- Nil stamp duty
Financialisation of gold
The IIBX will give an impetus to the financialisation of gold in India. India is one of the world’s largest importers and consumers of gold. The IIBX is India’s step toward influencing global bullion prices.