‘Unlocking Gold’s Potential’

India is the world’s largest importer and second largest consumer of gold. The country’s ravenous appetite for gold consumption is well known. For India to be in a position to set global prices rather than be a price-taker, institutional and market reforms are necessary, according to a host of expert speakers at the national seminar jointly organized by IMC (Indian Merchants Chamber) Chamber of Commerce and Industry and India’s premier commodity futures exchange Multi Commodity Exchange of India (MCX) recently in Mumbai.

Suggesting that the consumption volumes justified a further widening and deepening of the gold derivatives market, speakers pointed out that expansion of hedger participation and introduction of new products and instruments is sure to help achieve the objective.

Said Mrugank M. Paranjape, MD & CEO, MCX, “rationalisation of tax structure including Commodity Transaction Tax should top the policy agenda.” In terms of institutional reforms, he said that a transparent gold leasing market, upgraded standards of gold refiners and encouraging gold mining deserve close attention.

S. K. Mohanty, ED, SEBI urged the exchange and the market participants to work towards enhancing hedger participation. Mohanty said that new instruments, new products are being introduced by the regulator to bring new participants into the marketplace. Options trading is one such instrument, he remarked.

The business sessions covered topics as varied as revitalisation of Gold Monetisation Scheme and Gold Bond Scheme; a reforms agenda for making India a price setter and case for establishing a Gold Spot Exchange.

Deepak Premnarayen, President, IMC pointed out that the gold market faced issues such as high rates of customs duty, excise duty on gold jewellery and incidents of unauthorised imports. “The country’s gold trade needs to be reformed and more transparency brought in. The important message is, for a vibrant consumption market such as India, long-term policy clarity in more critical than other parameters such as price and availability”, he asserted.

A host of domain experts including Rajesh Khosla, MD & CEO, MMTC-PAMP spoke at the seminar which concluded with a price and market outlook session where global and Indian market drivers were discussed.