As the country moves towards creating a spot gold exchange, market regulator SEBI's Whole Time Member G Mahalingam has suggested routing all the imports of the precious metal through the exchange ecosystem in the future. Such a step would ensure that gold monetisation takes place right at the source as the metal enters the country, he said while addressing a conference organised by FICCI.

However, he also noted that the issue has not been dealt with in the papers floated by SEBI.

In the Budget for FY19, the government had mooted the idea of having regulated gold exchanges and followed it up by announcing SEBI as the regulator in the Budget presented in February 2021. The regulator has floated a consultation paper on the broad contours of such an exchange.

Mahalingam suggested that the time had come to move over to a system where all imports into the country will be routed through the EGR (Electronic Gold Receipt), adding that other countries with gold markets, like Turkey and China, already have such a system.

Any gold entering into a country beyond a particular purity level, anything beyond 995, will have to come through the exchange ecosystem, it will not be outside the ecosystem, he suggested.

Such a system will be a big advantage as the aspiration of gold monetisation takes place as soon as the metal enters the country, he said.

According to him, the experience of Turkey and China can serve as a good example for India as it goes about establishing such a market. At present, Indian imports about USD 35 billion worth of gold every year and the introduction of the market mechanism can help reduce the pressure on the current account deficit as well, he said, adding that the external sector balances of Turkey have benefited through the spot exchange for gold.