FICCI and WGC Recommend Changes in Gold Policy

Mumbai: A recent report issued by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the World Gold Council (WGC) has placed seven key recommendations before Indian policy makers which, it says, will help to monetize India’s large stock of household gold.

The findings of the report entitled ‘Why India needs a gold policy’, is based on data and analysis collected through a comprehensive survey conducted with 5000 consumers across India, and roundtable discussions and extensive interviews with stakeholders from the industry.

The key measures suggested are:

  • Establish an India Gold Exchange to ensure pricing standardization, increase transparency and improve supply and demand analysis.
  • Establish a Gold Board to manage imports, encourage exports and facilitate development of the infrastructure needed to ensure the Indian gold market functions to maximum effect.
  • Develop accredited refineries in line with international standards including upscaling the current domestic refineries.
  • Allow Indian banks to use gold as part of their liquidity reserves. This would incentivise them to introduce gold-based savings products.
  • Drive monetization of gold by incentivizing banks, revitalize Gold Deposit Schemes, introduce gold-backed investment and savings products.
  • Create a more active marketing strategy for Indian handcrafted jewellery. This could boost exports and highlight India’s expertise in this highly-valued sector e.g. by promoting handcrafted ‘India-made jewellery’ like the Swiss-made watches.
  • Drive the standardization of gold so that buyers and sellers can have faith in both the quality and price of their products. Introduce guidelines for compulsory quality certification of all forms of gold to encourage accountability

Another section looks at the policies adopted in countries like Turkey and China in response to similar challenges as those faced by India and how these countries monetized the local stock of gold to positive effect.

Dr. A. Didar Singh, Secretary General, FICCI said, “Through this report we have re-examined many assumptions around gold and have also suggested ways of monetizing this asset. We hope that this report will form the basis for formulating a comprehensive public policy on gold.”

Commenting at the launch of the policy report Somasundaram PR, Managing Director, India, World Gold Council said: “We believe the solution to meeting India’s enduring appetite for gold lies not in restricting the import of gold, but in making better use of the gold that is already in the country, making it a productive fungible asset class like any other financial savings. The need of the hour is to re-engage all stakeholders to develop a coherent long-term ‘India Gold Policy’ that results in a robust infrastructure for gold, drives standardization and transparency, encourages gold-based investment products and supports the economic priorities of the country.”