Ashok Gautam, Managing Director & CEO, India International Bullion Exchange (IIBX) discusses the potential of the IIBX to influence the Indian and global gold eco-system, and the opportunities that it presents especially for smaller jewellery exporters who can easily avail as little as 100gm of 999 purity gold via the IIBX platform.
Could IIBX play a role in the operations of jewellery manufacturers, or is it mainly for bullion traders and investors? Can gold imported through IIBX be used by jewellery manufacturers/exporters in the DTA or SEZ?
IIBX is the latest gateway for enabling the import of gold into India. As you know, DGFT had issued instructions that the Qualified Jewellers, so specified by International Financial Services Centres Authority (IFSCA), can import gold through IIBX.
The Qualified Jewellers must deal in precious metal goods falling under the four HSN codes (7108, 7113, 7114, 7118). So, both bullion dealers and manufacturers of jewellery find place there. To answer your question, yes, IIBX provides gold for jewellery manufacturers.
At this point of time, most of the Qualified Jewellers who have enrolled with us, are the domestic jewellery manufacturers. But I’m happy to advise that some exporters have also applied and have been given Qualified Jeweller status. So, the gold imported through IIBX is not only for the domestic jewellery manufacturers and bullion dealers, but also for the jewellery exporters.
Why does IIBX have a bigger proportion of domestic players compared to exporters?
We have embarked on various outreach programs in many cities, and in some of these events, the regulator IFSCA officials are also joining us. This is to get feedback and understand the viewpoint of jewellery exporters. We are more than happy to conduct on-site seminars, send our teams for discussion with groups of exporters, or conduct webinars.
At IIBX and GIFT City we will put in motion very soon the processes to ensure that (a) exporters who are having advanced authorisation from DGFT can take gold from IIBX and (b) exporters who can give bank guarantees to the Customs can also import gold from IIBX. These are two important points and for which we are actively engaged with the relevant authorities. We are happy to share that due directions have already been issued by the concerned authorities and work has already started for the integration of ICEGATE with the SEZ online, and once that happens, the process for import of Gold for Jewellery exporters in DTA area will become easier.
We are confident that linkage of ICEGATE shall happen soon. Just to reiterate, any Qualified Jeweller who is in the SEZ area can take gold from IIBX as it will simply be a transfer of gold from SEZ to SEZ.
Will the IIBX be feasible for small exporters to procure gold in smaller quantities of say 1kg or less?
For the contracts that we already have on our platform, for 995 purity, the minimum quantity which can be traded is 1kg. And for the 999 purity, the minimum quantity which can be traded is 100 grams. In fact, we have seen a few transactions for 1kg happening. So to answer your question yes, if required, an exporter can take delivery of gold in quantity as low as 100 grams.
How many Qualified Jewellers do you expect to add in the next one year?
As of 21st November 2022, we have 75 Qualified Jewellers and have a long list of applications which will make this number increase to 110 as of now. As mentioned earlier, we are embarking on outreach programs to help more people understand about the IIBX eco-system, which is a totally new concept. It is our responsibility that we reach out to them, especially in 10-12 of the bigger towns where we can have face-to-face interactions with the bullion industry.
Based on the feedback received, we have added many process flowcharts, PPTs, etc. on our website (https://www.iibx.co.in), and through your publication, I would request prospective Qualified Jewellers to go to the FAQs and Knowledge Centre tabs on the IIBX website for easy-to-grasp explanations.
With IIBX, how do you see the Indian gem & jewellery industry getting transformed in the future?
IIBX is an amazing concept! And when the Government and the industry think tanks prepared the blueprint, our regulator IFSCA came out with full regulations and guidelines to make this idea a reality. IIBX is promoted by a consortium comprising the top 5 market infrastructure institutions of the country, viz, CDSL, India INX (Subsidiary of BSE), MCX, NSDL and NSE.
Clearly, we are trying to revolutionise the way bullion gets traded in India, largely on the import side.
For the first time, entities are being given access to a platform where they can import gold directly. Currently, gold in India gets imported through the Nominated Agencies or Nominated Banks, but at IIBX, the Qualified Jeweller gets access to an international platform where the US dollar transparent prices are available for them to see on real-time basis.
They can also put up their bids and if their bids are successful, they can import gold at their own prices. The platform which we are providing is democratic – so the offer price, if it is given for a quantity of say 100kg, then that offer price is valid for 100kg and also for a bid of 1kg.
Next benefit is ease of trading. Right now, our platform is open from 9:00am to 5:30pm. One can just click a button and trade on their desktop. Going forward, we plan to expand the timings to cover 22 hours in a day.
Moreover, we have three vaults in the GIFT City. Our vaulting partners have already told us that they should be able to ship gold by next day to any destination in India. But we also are working with our own IT and with our depository to compress the settlement and clearing cycle because as of today, the settlement and clearing timings are in the evening from 6:00pm to 9:00pm.
There is already 100% advanced pay-in of dollars and 100% of advanced pay-in of Bullion Depository Receipt (BDR). So, why should we wait for the evening settlement cycle? In fact, we wish to run the settlement cycle every half an hour so that the moment that trade is done, in the next half an hour cycle, the trade can go for settlement and within an hour or two they can get the BDR to their account. We are working on it to smoothen the process and the process shall be enabled after due IT testing and regulatory approvals.
We are also in talks with our vaulting partners to have IFSCA-approved vaults in various SEZs. We could have at least 5 to 6 centres covering all the geographies in the country. So that Qualified Jewellers can trade on IIBX electronically and take the delivery of gold from any of these vaults near to their locations without any loss of time.
Any other information that you wish to share with our readers?
There are a lot of things happening on the international side as well that I haven’t discussed in this interview. We believe that steps taken towards the international side of trades would put India in a great spot in the global bullion market in accordance with the dream that our honourable Prime Minister had articulated – that India should be a price influencer and a price setter of gold.