Prime Minister Narendra Modi inaugurated the India International Bullion Exchange (IIBX) at the Gujarat International Finance Tec (GIFT) City near Gandhinagar.

What is bullion?

Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins. Bullion can sometimes be considered legal tender and is often held as reserves by central banks or held by institutional investors.

What is IIBX?

• India’s bullion market is one of the largest in the world, the second largest in terms of consumption and holds an important position globally. However, it lacks organisation and structure.

• Gold is tightly regulated in India and currently only nominated banks and agencies approved by the central bank can import gold and sell to dealers and jewellers.

• A bullion spot exchange is expected to address these challenges and eliminate market inefficiencies. As a prominent market, India has always aspired to be a price setter for the bullion.

• IIBX is India’s first international bullion spot exchange that has been set up in GIFT-IFSC. It will allow qualified jewellers to import bullion and carry out transactions of the same on the exchange.

• IIBX shall be the “gateway for bullion imports into India”, wherein all the bullion imports for domestic consumption shall be channelised through the exchange. 

• With its technology-driven solutions, IIBX will facilitate the transition of Indian bullion market towards a more organised structure by granting qualified jewellers direct access to import gold directly through the exchange mechanism.

• One kilo gold of 995 purity and gold mini in 100 gram and of 999 purity will be traded initially at the IIBX. 

• International Financial Services Centres Authority (IFSCA) is the regulator of IIBX.

Setting up of IIBX

• In 2018, NITI Aayog suggested setting up bullion spot exchanges that would provide an efficient and trusted ecosystem for trading gold and ensure the success of financialisation of gold, with an aim to improve market transparency, protect the interests of market participants and facilitate India to emerge as a price setter for gold.

• Following the announcement by Union Minister Nirmala Sitharaman in Union Budget 2020-21, the International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020 were notified on December 11, 2020 which cover the bullion exchange, clearing corporation, depository and vaults. 

• Pursuant to MoU between National Stock Exchange of India Limited (NSE), the Multi Commodity Exchange of India Limited (MCX), India INX International Exchange (IFSC) Limited (INDIA INX), National Securities Depository Limited (NSDL), Central Depository Services (India) Limited (CDSL), the holding company India International Bullion Holding IFSC Ltd (IIBH) has been created for setting up and operationalising International Bullion Exchange, Bullion Clearing Corporation and Bullion Depository in IFSC-GIFT City.

• A pilot project was launched in August 2021.

Expected outcomes of IIBX

• IIBX members include Globe Capital IFSC, Motilal Oswal Finsec IFSC, Anand Rathi International Ventures IFSC, SMC Global IFSC, Stockholding Corp of India among others. Currently, there are 64 jewellers registered on the IIBX.

• The exchange ecosystem is expected to bring all the market participants to a common transparent platform for bullion trading and provide an efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish India’s position as a dominant trading hub in the World.

• It will facilitate efficient price discovery with the assurance of responsible sourcing and quality, apart from giving impetus to the financialisation of gold in India. 

• It will empower India to gain its rightful place in the global bullion market and serve the global value chain with integrity and quality. 

• IIBX also re-enforces the commitment of the government of India towards enabling India to be able to influence global bullion prices as a principal consumer.

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