India boasts of having the oldest and most extensive physical gold markets in the world, with gold consumption of more than 1,000 tonnes per annum. Over the years, the country has emerged as a hub for gold refining, with majority of the gold manufacturers and bullion refineries located in it. Rajesh Exports (Bangalore), Malabar Gold & Diamonds (52 outlets in India, and 30 in Gulf Cooperation countries), Senco Gold Jewellers (West Bengal), Krishniah Chetty& Sons (Bangalore), Tribhovandas Bhimji Zaveri (Mumbai), Bhima Jewellers (Kerala), are just to name a few.
As a matter of fact, India has 32 gold refineries, out of which 27 process dore or unrefined gold with a total refining capacity of 1,467 tonnes. The country’s dore imports in 2014 were 120 tonnes, which rose to 180 tonnes in 2015. The refineries in Uttarakhand are said to process a third of the gold refined in India. A number of new refineries are also being set up by big bullion dealers in the country.
Industry experts at Rajesh Exports highlight that India is looking forward to implement sourcing standard for gold refiners, based on the guidelines set out by the Organisation for Economic Co-operation and Development (OECD). The country has the largest hoarders of gold in the world (in the region of 25,000 tonnes). Thus, there arises a dire need to set separate norms. The Bureau of Indian Standards has given bullion refineries time till May 2018 to register with it.
The consensus of opinion is that the setting up these standards will lead to transparency in mineral supply chains, as well as sustainable corporate engagement in the mineral sector. As per the analyst at Rajesh Exports, it will prove to be favourable for Indian refiners as implementation of the guidelines will help them mark their presence globally. It will further help the refiners in meeting the expectations of banks, customers and patrons from across the globe.
“Aligning with the OECD due diligence guidance, the international benchmark will ensure that the Indian responsible mineral sourcing guidelines are recognised in other markets, and meet the expectations of banks, customers, and overseas clients,” said Tyler Gillard, head of the responsible business conduct unit, investment division, directorate for financial and enterprise affairs, OECD.
“The OECD guidance is flexible and can be adapted to specific market characteristics in India, as has been done in London, Dubai and China. This flexibility includes adapting approaches to build on existing checks on imports of bullion and gold dore,” he added.
The new guidelines hold that the precious metal imported should not be from mines that employ child labour. The mines should not include any high-risk or conflict zones. Also, they should not violate any human rights or have any indirect or direct funding from terrorist organisation.
“It is now up to the Indian industry to work together and develop the Indian guidelines, and more importantly, a robust audit mechanism. We encourage any audit of refiners to be overseen by a group of industry associations,” said Mr Gilliard.
The working committee for the guidelines has decided the regulatory model would be developed in accordance with the London Bullion Market Association and government supervision.
Once the guidelines are formulated and norms are set, it is expected that India will be able to export gold.
“The government should at some point in time consider allowing export of gold bars refined by Indian refineries after the country implements responsible gold sourcing guidelines,” said Rahul Gupta, director of Bullion Federation.