PTI; IBMA set to catapult India as price-setter in bullion trade
MUMBAI: India, the leading player in import and trade in bullion and export of jewellery, is set to become a 'price-setter' from the position of industry official said.
India imports around 25 per cent of the world's gold production, still it does not exert any significant impact in discovery of gold prices in the international market due to its fragmented and unorganised bullion trade. The country depends on the international market for the benchmark price which is based on London AM/PM price fixing.
"Following the setting up of the Indian Bullion Market Association (IBMA) by leading bullion and jewellery merchants associations in alliance with the National Spot Exchange (NSEL), India will be able to create a benchmark Indian spot price for bullion," NSEL Managing Director and CEO, Anjani Sinha, told reporters here.
The objective of promoting IBMA is to create linkages between domestic stock of gold and silver, recycled gold and silver and to remove disparity between domestic prices and international prices.
"By bringing together bullion dealers and jewellers, IBMA will address global bullion issues and reduce disparity between domestic prices and international prices. It also aims to create linkages between domestic stock of gold and silver," Bombay Bullion Association President, Suresh Hundia, said.
During recent times, the bullion market has witnessed a high degree of volatility in prices, mostly due to fluctuation in the international market and factors influencing dollar valuations. This has severely affected the bullion and jewellery trade in India, as demand for ornaments as well as bullion usually comes down if prices are volatile, an industry official said.
The exports of Indian gold bar is also not allowed by the Government. This creates a disparity in Indian gold price and international prices, if the international price goes above a certain level. It creates a distortion in physical trade, which in turn severely affects import of gold in India.
Most of the other commodities and merchandise are under OGL, where both import and export of the commodity is allowed without any hassle. But, in case of gold and silver, there are a number of restrictions on import as well as export of gold.
In fact, prices of gold and silver differ from place to place in India even at the same moment. There is no benchmark price available, which is valid for the entire country, the official said.
