Indian Government Urged to Liberalize Bullion Market

Representatives of stakeholders in the gold industry, from jewelry manufacturers to trading and investment houses, have urged the Indian government to fully liberalize the bullion trade within the country. An estimated 80 percent of the gold imported into India each year is used for jewelry fabrication.

These views were presented at the 2nd International Gold Summit organized by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) held in Delhi on September 1-2, 2006. The Summit focused on the measures required to develop India as a global gold trading hub.

Prominent among the speakers was Bakul Mehta, chairman of The Gem & Jewellery Export Promotion Council (GJEPC) who is seeking duty free imports as well as permission for the direct import of bullion to all commercial banks, star trading houses, and gems and jewelry importers or exporters with IEC numbers.

Trading in bullion has grown considerably, with volume currently believed to stand at Rs 65,000 million ($1,408 million) per day; in comparison, over Rs 35,000 million ($758.3 million) is traded in stocks each day. Anil K. Agarwal, ASSOCHAM president said that according to the organization's estimates, daily trading in gold and silver would reach a level of Rs. 200 billion  ($4.33 billion) in the next two to three years.

A paper presented by ASSOCHAM at the seminar also estimates that India’s gold jewelry exports will exceed Rs. 315 billion ($6.82 billion) by 2010 and Rs. 479 billion ($10.38 billion) by 2015 against its current export size of Rs. 175 billion ($3.79 billion). Gold demand is expected to rise to 980.83 tons by 2010, and 1152.64 tons by 2015 against the current figure of 800 tons.

According to Agarwal, “Jewelers have identified exports as a focus area, setting up manufacturing units and design training centers to improve quality. India’s exports of jewelry to the U.S. have increased from $565 million in 2001 to $1,751 million in 2005.”

Increasing international interest in the gold market in India is also reflected in the decision of the world’s largest bullion trading association, the London Bullion Market Association (LBMA), to hold its next annual gold conference in Mumbai in 2007.