- Date : 18/08/2022
- Read: 3 mins
The IIBX will enable jewellers to bypass banks and buy gold directly from international sellers, saving on the commission. This will benefit jewellers, who can also pass on those benefits to consumers.
On 29 July 2022, Prime Minister Narendra Modi inaugurated the India International Bullion Exchange (IIBX) in GIFT City, Gujarat. Only the third bullion exchange of its kind in the world, the IIBX is expected to eliminate market efficiencies, leading to better price discovery. In this article, we will discuss how the India International Bullion Exchange will benefit Indian jewellers and consumers.
How will the IIBX benefit Indian jewellers?
Before the establishment of the IIBX, jewellers were importing gold through banks and other designated agencies. The banks fixed the gold rate based on the rate received through COMEX in New York or London. The jewellers had to pay a commission to the banks and had no say in the rate of gold.
But now, after the establishment of the IIBX, jewellers can register with it as qualified jewellers. Any jeweller that has a minimum turnover of Rs 25 crore can become a qualified jeweller and can bid their own gold prices for the gold they wish to buy through the IIBX. In this manner, qualified jewellers can cut out intermediaries like banks, save on the commission, and quote their own price for the gold traded at the IIBX.
Who will be the gold sellers at IIBX, GIFT City?
The Government has invited various international gold sellers and traders - such as bullion banks, gold refiners, foreign banks, or gold trading houses - to sell or trade their gold through the IIBX. As India is the world’s second-largest importer and consumer of gold, all the above entities have shown keen interest in selling and trading gold through the IIBX.
With a wide choice of sellers available, Indian jewellers will have the freedom to buy gold from an entity of their choice, of the quantity required, and at a price they prefer. So, the IIBX will have the world’s largest gold sellers on the one side and the world’s second-largest buyer (Indian jewellers) on the other. It will help in balancing supply and demand and allow better price discovery.
How will the IIBX benefit Indian consumers?
Qualified jewellers will be able to import gold through the IIBX by avoiding bank commissions and at their own price. They can get this gold shipped to all parts of India. In this way, jewellers will be able to pass on the benefit of lower prices to their customers. Also, the gold imported through the IIBX will be sold by jewellers throughout India, which will help achieve the Government’s objective of one nation one gold rate.
Will IIBX make India a gold price influencer?
Even though India is the world’s second-largest gold importer and consumer, it has always been a price taker. With a view to changing this, the Government has established the IIBX to make India a gold price influencer in the first stage. Ultimately, it wants India to be a gold price maker.