Only 2% of India’s gold imports routed through exchanges; SEBI ED flags gap

Thu Aug 13 2026

India needs to move beyond its position as one of the world’s largest consumers of gold and build a larger role in global bullion price discovery, SEBI Executive Director Ram Mohan Rao said at an event on Wednesday.

Highlighting the gap between India’s massive gold holdings and exchange participation, Rao noted that only about 17 tonnes of gold was delivered through the exchange mechanism last year, against imports of around 780 tonnes.

India needs bigger role in global bullion price discovery

Rao said India’s scale of gold demand gives it an opportunity to play a much larger role in global bullion markets, but achieving that would require deeper liquidity, stronger market infrastructure and greater participation from domestic as well as international players.

“India must aspire not merely to be one of the world's largest consumers of precious metals, but to become an increasingly important participant in global bullion price discovery, trading, financing, risk management and associated financial services.” He said the evolution of the bullion market should not be viewed as a choice between physical and financial gold, but as an integration of the two.

“The future of bullion is not necessarily physical versus financial. It's physical plus financial. The physical market provides the underlying economic reality. The financial market provides liquidity, price discovery, risk management and wider access, he added. According to Rao, India’s ambition should be to build an ecosystem where physical bullion markets and financial markets interact efficiently, transparently and with greater investor confidence.

Just 2% of imports delivered through exchanges

One of the key concerns highlighted by Rao was the relatively small share of India’s fresh gold imports that is routed through exchange mechanisms. He said average trading volumes in the bullion market are around Rs 34,000 crore a day, but exchange deliveries stood at only about 17 tonnes last year, compared with around 780 tonnes of gold imported by India. That means exchange deliveries accounted for only around 2% of total imports.

Rao acknowledged that comparing exchange deliveries directly with total imports may not be a perfect measure, given the absence of comprehensive data on the stock of gold already held privately in India. However, he said the numbers indicate significant headroom for deeper integration between India’s physical gold market and financial markets.

25,000-30,000 tonnes of privately held gold

Rao also pointed to the enormous stock of gold already held within the country as a potential source of financialisation. According to his estimate, around 25,000-30,000 tonnes of gold is held privately in India, while another roughly 4,000 tonnes is held in the form of gold with temples and other institutions.

He said such holdings could potentially be monetised and brought into the formal financial ecosystem, including through digital and financial structures. The challenge, however, is to create sufficient incentives for different participants across the bullion value chain to come into the organised market.

Retail investors need to come in first

Rao said greater participation by retail investors could help create the foundation for wider participation across the bullion ecosystem. “It is important that if this industry needs to grow then there has to have some benefit for the retail investors first. For retail investors to get in, then the mining companies should come in, refineries should come in so that everyone — jewellery associations, jewellery retailers — can come,” Rao said.

He emphasised that building a globally relevant bullion ecosystem cannot be the responsibility of a single regulator or segment of the industry.

Instead, exchanges, clearing corporations, banks, brokers, custodians, refineries, jewellers, asset managers and technology providers will all need to participate.

IFSC key to India's bullion ambitions

Rao identified the development of the International Financial Services Centre (IFSC) at GIFT City as an important milestone in India's effort to create a transparent and internationally connected bullion market.

For India to become globally relevant in bullion, he said the market would need deep liquidity, credible price discovery, internationally accepted quality standards, robust clearing and settlement systems, efficient warehousing and delivery, reliable reference prices and strong risk-management mechanisms.

He also highlighted the role of technology in connecting different parts of the ecosystem.

Physical-financial integration key to next phase

Rao's comments come against the backdrop of the growing range of regulated financial products that allow investors to gain exposure to precious metals without physically purchasing and storing gold.

Gold ETFs, silver ETFs and other exchange-traded structures have widened investor access to the precious metals ecosystem through securities markets.

The larger opportunity, Rao suggested, is to connect these financial products more closely with India's physical bullion ecosystem and use the country's scale of demand and gold holdings to develop greater influence over price discovery.

For India to meet its long-term economic ambitions, he said, the bullion ecosystem will require coordinated efforts from regulators, government and industry.

“Every participant needs their responsibility,” Rao said, stressing that collective action would be necessary to build a deeper and more globally influential bullion market.

Rao was speaking at the Global Commodity Conclave 2026 in Mumbai.

Source: https://bfsi.economictimes.indiatimes.com/