Four Years On, Why Is India's Bullion Exchange Still Struggling?

The resignation of Ashok Kumar Gautam, the first chief executive of India International Bullion Exchange IFSC Ltd. (IIBX), has put fresh focus on the struggles of India's sole dedicated bullion exchange, which has failed to attract meaningful trading volumes four years after its launch.

Gautam stepped down citing personal reasons, according to media reports. He is currently serving a three-month notice period that will end in November. His exit raises questions about the future of an exchange that has struggled to scale up since it began operations in 2022, according to the reports.

What Is The IIBX?

The IIBX is located at Gujarat International Finance Tec-City (GIFT City) and is regulated by the International Financial Services Centres Authority. It was first announced in the Union Budget 2020-21 by Finance Minister Nirmala Sitharaman, with the goal of setting up a dedicated bullion exchange at India's International Financial Services Centre. Prime Minister Narendra Modi launched the exchange on July 29, 2022, during a visit to Gujarat.

The exchange was set up with the aim of helping India influence global gold prices, enabling efficient price discovery, ensuring standardisation and quality assurance, and supporting the financialisation of gold in the country. The IFSC Authority had said the exchange would help India "gain its rightful place in the global bullion market and serve the global value chain with integrity and quality."

The IIBX is backed by some of India's leading market infrastructure institutions. Its holding company, India International Bullion Holding IFSC, counts the National Stock Exchange, Multi Commodity Exchange, India INX International Exchange (a BSE subsidiary), National Securities Depository Ltd and Central Depository Services among its stakeholders, according to the exchange's website and media reports. The BSE recently raised its stake in the holding company from 3.33% to 20%.

The exchange gives qualified jewellers a direct channel to import gold, a route previously limited to Reserve Bank of India-authorised banks and nominated agencies. Under this framework, imported gold is stored in IFSC-approved vaults at GIFT City, against which electronic gold receipts are issued and traded on the exchange.

India's Price-Taker Problem

Despite being one of the world's largest consumers of gold, India functions as a "price-taker" in the global market rather than a price-setter. The country relies heavily on international benchmarks such as London's AM/PM gold prices, largely because it imports the vast majority of the bullion it consumes. Even so, India's massive domestic demand during the festival and wedding seasons has a notable influence on regional premiums and international market sentiment.

India has been working to shift towards becoming a price-maker, through steps such as expanding domestic mining and reforming banking channels for bullion imports. Last year, reports suggested that India was poised to make this transition, with domestic mining expected to meet around 20% of the country's gold demand over the next decade.

Notwithstanding its ambitions, the IIBX took nearly three years to cross the 100-ton mark in cumulative gold trading, a fraction of the roughly 700 tons India imports annually through other channels, including banks.

India's overall annual gold imports stand at around 800 tonnes, sourced through channels such as consignment-outright arrangements, gold metal loans and jewellery exports.

A Brief Recovery Amid Disruption

Notably, trading volumes on the exchange had slowed considerably before recovering briefly in April 2026, according to a Bloomberg report. This came during a period when administrative bottlenecks and tax uncertainty left the IIBX as the only functioning channel for gold imports into the country.

Banks, which typically import most of India's refined gold, halted shipments after customs authorities began demanding a 3% integrated goods and services tax (IGST) on the metal, Surendra Mehta, secretary at the India Bullion and Jewellers Association, said earlier this year. Banks had been exempted from this levy when India adopted the IGST in 2017.

The disruption began on April 1, 2026, when shipments got stuck at customs due to delays in the commerce ministry publishing its annual list of banks eligible to import precious metals, along with a separate clearance order required from customs authorities before consignments could be released, traders told Bloomberg. Banks did not clear any gold through customs that month, and only a small quantity moved through the IIBX.

As a result, India's gold imports in April fell to a near 30-year low of around 15 metric tons, excluding the pandemic period, down from 35 tons in April 2025 and an average of about 60 tons a month during the 2025-26 fiscal year. This decline came despite the Akshaya Tritiya festival, the second-biggest gold-buying occasion in India after Dhanteras, falling on April 19 that year. A Mumbai-based bullion dealer at a private bank told Reuters that banks had brought gold into India ahead of the festival, but the shipments remained parked in vaults, with about 8 tons stuck, pending customs clearance without the added tax.

Bank bullion dealers told Reuters that India likely spent about $1.3 billion on gold imports in April, well below the fiscal year's monthly average of $6 billion. However, official commerce ministry figures released in mid-May showed gold imports actually rose 82% year-on-year to $5.62 billion in April.

The Bloomberg report noted that the tax demand, along with earlier delays in authorising banks to import bullion, may have been aimed at slowing gold imports to help narrow India's trade deficit and support the rupee, which had been among the weaker-performing Asian currencies.

During this period, trading through the IIBX rose sharply, with April recording the highest daily volumes in a year and May starting off stronger still, traders told Bloomberg. However, traders noted that importing through the exchange takes longer and ties up more working capital compared with other channels. The IIBX has continued to engage with the government and industry groups to strengthen participation on the platform.