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Single spot price for gold soon 

Financial Chronicle , Jan 10, 2018

There will soon be a single spot price for gold for the entire country. At present, spot prices differ from metro to metro and lack of transparency in supply-demand results in suppliers levying premiums. A uniform spot price could be a reality as setting up of a spot exchange is a major initiative of the ‘gold policy,’ which is expected to be unveiled by March, said a source privy to the development. The spot exchange will aim at establishing one spot rate, especially with the goods and services tax bringing in a uniform tax structure. Creating a gold board is another big idea of the policy.

Besides pricing standardisation, the spot exchange will increase transparency and improve supply and demand analysis. It will also facilitate banks dealing in the metal to hedge in gold options, the source added.

A panel headed by Ratan P Watal, former finance secretary, is likely to submit its recommendations on gold policy by January 31 and a comprehensive policy is expected by March. Last year, government policy think-tank Niti Aayog had set up a committee to transform gold market under the chairmanship of Watal. The policy document is being put in place by Niti Aayog is consultation with different ministries and industry bodies. “The government has sought recommendations from the industry and the policy is part of the ‘G2B’ (government-to-business) initiative. In order to reduce the impact on current account deficit, historically governments have been trying to reduce gold imports. With this policy, government will try to be proactive in terms of increasing exports, recycling, refining and mining of gold,” said Ajay Mehra, managing director, Mehrasons Jewellers, and co-chair of FICCI’s gold and jewellery committee.

A gold board will be set up to help manage imports, encourage exports and facilitate development of the infrastructure needed to ensure the Indian gold market functions to maximum effect.

“At present, we do not have a single government agency to deal with gold. The board will provide the convenience of a single window for all policy-related matters,” said Mehra.

However, the government may take a little longer to make hallmarking mandatory, as it finds that the infrastructure is not yet ready to take up the huge task.

According to industry sources, the government may also look at lowering the import duty on gold in the coming budget. While the industry has asked to bring down the duty below six per cent, there could be a two per cent reduction in duty. In order to address the issue of import of gold at lower duty under free trade agreement (FTA) from countries like South Korea, the government might take some initiatives to channel the imported gold entirely for re-export purposes.

“We have put forward our recommendations for the budget and the gold policy that will also address issues related to smuggling. The country has seen almost 600 tonnes of gold being smuggled into India in the last three years. Now that the CAD situation has improved, we have asked the government to bring it down below six per cent,” said Nitin Khandelwal, chairman, All Indian Gems and Jewellery Trade Federation.