Summary

India has two gold exchange structures: the domestic segment trades Electronic Gold Receipts (EGRs) on BSE and NSE under SEBI, while the India International Bullion Exchange (IIBX) at GIFT City trades bullion imports under IFSCA. Both bring regulation to a historically fragmented market.

Introduction to Gold Exchange in India

India is among the world’s largest gold consumers, yet for decades operated without a regulated spot exchange. Prices varied by city, purity depended on sellers, imports passed through limited agencies, and price discovery relied on the London benchmark.

The Gold Exchange in India addresses this through two initiatives. The domestic framework emerged via SEBI in 2021–2022 to trade gold as a security. The international segment followed when IIBX opened at GIFT City in July 2022, per the 2020 Union Budget proposal.

Formalization provides a transparent domestic reference price, regulatory oversight, standardized purity (995 and 999 fineness), and lower systemic risk. For an economy where gold imports heavily impact the current account, this visibility is crucial.

How the Gold Exchange Works in India

Understanding how India’s gold-exchange framework works requires distinguishing between the two structures, since they serve different participants and trade different instruments.

The domestic segment operates on BSE and NSE, where the traded instrument is the Electronic Gold Receipt. Its lifecycle runs in three stages:

• Creation: Physical gold is deposited with a SEBI-registered vault manager, which records the details and generates an EGR credited to the depositor’s demat account.
• Trading: The EGR trades on the exchange like any listed security, settling on a T+1 basis, with denominations from 100 milligrams to one kilogram.
• Conversion: A holder may submit a withdrawal request and take delivery of physical metal, at which point the corresponding receipt is extinguished by the vault manager.

The international segment (IIBX) is backed by NSE, India INX, NSDL, CDSL, and MCX, trading Bullion Depository Receipts. T+0 contracts run in 995 (1kg) and 999 (100g) forms adhering to OECD due diligence sourcing.

Qualified Jewelers import directly, Tariff Rate Quota holders trade under the India-UAE agreement at preferential rates, and IFSC Banking Units clear trades. Bullion at GIFT IFSC can be re-exported duty-free.

Gold Exchange Regulations in India

Two regulators govern the two structures, and the distinction determines where an investor’s protections come from.

SEBI monitors the domestic segment. The operating architecture was established in the Gold Exchange Framework circular of 10 January 2022, EGRs being notified as Securities under Section 2 (h) (iia) of the Securities Contracts (Regulation) Act, 1956. Registered custodians are registered under the SEBI (Vault Managers) Regulations, 2021 and standard operating guidelines for custodians issued in February 2022 detail creation, withdrawal and extinguishment procedures.

A few obligations follow from that structure:

• Vault manager registration: Custodians have to register with SEBI, provide a minimum Rs. 10 lakh fidelity security deposit to a depository and submit to inspection of books and gold deposits. By mid-2026, only three were registered.
• Segregation of assets: Client gold is locked away from the vault manager’s balance sheet.
• Investor recourse: Assaying may be requested before physical delivery.

IFSCA regulates IIBX under a separate mandate. In a circular dated 15 June 2026, IFSCA revised eligibility rules for bullion import by Qualified Jewelers and CEPA quota holders. The net worth threshold was removed for SEZ unit applicants in full, and entities with a valid Registration-cum-Membership Certificate from the Gem and Jewelry Export Promotion Council were eligible for Qualified Jeweler notification. The amendment was intended to encourage participation among small and mid-sized jewelry exporters that had previously been excluded by financial thresholds.

Expanding Your Portfolio: Investing in the Gold Exchange

For individual investors, only the domestic segment is directly accessible. IIBX serves jewelers, bullion dealers and institutional participants rather than retail buyers.

Participation in EGR Gold requires a demat account with NSDL or CDSL and a trading account with a broker that has activated the EGR segment. That last condition is not universal, since several brokers had not enabled it at the NSE launch, and it warrants confirmation before an order is placed.

EGRs have several characteristics that investors should compare with other gold investment options: 

• Physical redeemability: Unlike gold ETFs, an EGR can be converted into metal, subject to minimum quantity and applicable charges.
• Tax treatment on conversion: Under Section 47 of the Income Tax Act, amended with effect from April 1, 2024, converting physical gold to an EGR and back is not a transfer, so no capital gains liability arises at either point.
• GST position: No GST applies to EGR transactions on the exchange. The 3% rate applies only where physical delivery is taken.
• Collateral utility: EGRs are accepted as collateral with a 20% haircut and no concentration cap, against bullion collateral capped at 30% of the total.
• Liquidity constraint: EGR volumes remain modest. Gold ETF assets crossed ₹1.71 lakh crore by March 2026, and that depth produces narrower spreads than the EGR market currently offers.

Two comparisons complete the picture. Sovereign Gold Bonds, long the most tax-efficient route, have seen no fresh issuance since February 2024 and no calendar for FY 2026-27. Digital gold products offered by various platforms fall outside SEBI’s regulatory framework.

Impact of Gold Exchange on India’s Economy

The economic case rests on formalization rather than on trading volume, which remains modest by international standards.

Domestic price discovery

A regulated spot exchange provides a domestic reference price instead of relying primarily on international benchmarks. 

Import channel transparency

Routing bullion through IIBX places imports within a supervisory framework that incorporates OECD responsible-sourcing requirements, which matters where gold represents a significant component of the trade deficit.

Formalization of an unorganized trade 

Bringing transactions under SEBI and IFSCA supervision can reduce risks associated with fragmented and poorly documented market activity. 

Support for jewellery exports

Direct import access for Qualified Jewelers, widened by the June 2026 amendments, lowers intermediation costs for exporters competing internationally.

Financialization of household holdings

Indian households hold substantial gold outside the financial system. Instruments permitting conversion to dematerialized form without a tax event create a route for that metal to enter regulated channels.

Constraints remain visible. Vault coverage extends to only three registered managers, the demat requirement limits the addressable retail market, and institutional market-making has yet to develop meaningfully in the EGR segment.

Conclusion

India’s gold exchange architecture now spans a domestic securities market and an international import gateway, each with its own regulator, instrument and participant base. The domestic EGR segment offers individual investors regulated exposure to physical gold with redemption optionality, at the cost of liquidity thinner than established alternatives. IIBX serves a different function entirely, formalizing the channel through which bullion enters the country.

Neither structure has yet reached the scale envisaged when the frameworks were notified. The regulatory foundation is in place, but wider adoption will depend on expanding the vault network, increasing broker participation and developing market-making activity. For investors, EGRs now provide regulated access to physical gold, although market liquidity remains limited. 

Key Highlights

• SEBI governs domestic EGR trading; IFSCA regulates IIBX at GIFT IFSC.
• BSE launched EGR trading in October 2022; NSE followed in May 2026.
• IIBX allows resident jewelers to import bullion directly, bypassing nominated agencies.
• EGR denominations start at 100 milligrams via standard demat accounts.