It is time to monetise India's large stock of household gold and to establish an Indian Gold Exchange to ensure pricing standardisation, increase transparency and improve supply and demand analysis, say industry chambers.
"Why India needs a gold policy", released by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the World Gold Council Tuesday, made seven key recommendations for an effective policy including a board to manage imports, encourage exports and facilitate development of the infrastructure needed to ensure the Indian gold market functions to maximum effect.
The report further underlined the need to establish an India Gold Exchange to ensure pricing standardisation, increase transparency and improve supply and demand analysis.
"Demand for gold in India is interwoven with culture. It would be futile to control gold demand knowing how much the passion for gold drives savings itself.
"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," said Somasundaram P.R., managing director, India, World Gold Council.
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 standardisation and transparency, encourages gold-based investment products and supports the economic priorities of the country, he said.
"With India at the centre of the global gold eco-system, it is imperative that we find ways of mobilising and monetising the 22,000 tonnes of gold in Indian households to fund economic growth," Somasundaram added.
The recommendations in the report are backed by data driven analytics, for which, the World Gold Council commissioned FICCI, who conducted a widespread survey of Indian consumers.
The survey was conducted with 5,000 respondents across India.
The findings stated that consumers' continue to buy gold whatever the fiscal circumstances, Indian consumers buy gold as an investment as well as an adornment and gold demand is not dependent on price fluctuations.
