The country's only International Financial Services Centre (IFSC) is in GIFT City near Ahmedabad in Gujarat.
IFSC has the potential to become a centre of international finance and high end data processing, the minister added. It has 19 insurance entities and 40 banking entities. IFSC has also provided for setting up of precious metals testing laboratories and refining facilities.
This announcement is in line with Prime Minister Narendra Modi's vision that GIFT City would become a price setter in some of the world's largest traded instruments in the next 10 years.
"We welcome the announcement in today's Union Budget on setting up of an International Bullion Exchange at GIFT IFSC," said Tapan Ray, MD and Group CEO at GIFT City.
"Finance Minister has re-emphasised the importance of GIFT IFSC as an emerging global financial services hub. The policy pronouncement regarding GIFT IFSC gives a tremendous boost to investor confidence both in India and abroad," he added.
V Balasubramaniam, MD and CEO of India International Exchange said they are keen to set up the international bullion exchange at GIFT IFSC.
The finance minister said in recent years there has been a surge in trading volumes of Indian rupee in the offshore financial centres.
The government and the Reserve Bank have taken various measures to permit Rupee derivatives to be traded at IFSC.