Rajesh Khosla, MMTC-PAMPS said, "The good delivery draft has been modelled on international norms for precision and quality set by LBMA, on which there can be no compromise. The Indian elements in this draft deal with finance and production numbers that relate to the Indian environment. The quality standards proposed are global and there is no compromise on that."
WGC is also preparing feasibility report for spot exchange for gold, which is likely to be out in a month or two. Under the draft norms, refineries will come under the ambit of the Indian good delivery standards proposed by IBJA, if they have four years of experience in refining metals, an annual refined production of 5 tonnes, and a tangible net worth of Rs 15 crore.
IBJA has also proposed specifications for good delivery bars, integrated responsible gold guidance proficiency testing and proactive monitoring and auditing procedures. Responsible norms include procedures to be followed for ensuring gold is not imported from conflict zones or areas where mining is either illegal or the revenue from mined gold is used for illegal or anti-social activities.
Said Surendra Mehta, secretary IBJA, which prepared good delivery norms for gold along with all stakeholders: "Indian good gold delivery rules and responsible gold standards are key to the establishment of a gold spot exchange." IBJA put the draft on its website and has invited suggestions from stakeholders on the draft rules till August 14. Mehta added, "The rules for good delivery and responsible gold standards will also apply to silver." Comments on this draft have also been invited from government, BIS, RBI and Sebi among others.
However, according to sources in the know, work for setting up a gold exchange is being executed on several front. Apart from IBJA's proposed India good delivery norms and WGC feasibility report, a proposal is under discussion in the finance ministry on GST treatment.
According to the proposal relating to GST on gold traded on the proposed spot exchange, trading will not attract GST, only deliveries will. Vaults storing gold will be recognised by the exchange and delivery centres covering major trading and processing areas will also be identified. Deliveries will have gold swap options to facilitate intercity trade. So, if a trader in Chennai sells gold to a trader in Mumbai, then the seller's account in Chennai will be debited, while delivery will be made from the vault situated in Mumbai.
Trading will be on a nationwide online platform. BSE and commodity exchanges are already deliberating this issue. BSE has also proposed to set up a gold spot exchange in partnership with IBJA.
Discussions held so far on the gold spot exchange have also included issues such as who should regulate the bourse, whether or not all imports should be compulsorily sold on the spot exchange. Some clarity will emerge after WGC comes out with its feasibility study.