Context: The Prime Minister will launch India's first International Bullion Exchange - International Bullion Exchange (IIBX) - in the GIFT city (Gujarat International Finance Tec-City), in Gujarat.

What is a Bullion?

• Bullion refers to physical gold and silver of high purity often kept in the form of bars, ingots, or coins.

• It can sometimes be considered as a legal tender.

• It is often held as reserves by central banks or held by institutional investors.

International Bullion Exchange (IIBX)

• IIBX was announced in the 2020 Union Budget.

• It is India’s first International Bullion Exchange set up at the GIFT City, Gandhinagar.

• GIFT City is India’s maiden International Financial Services Centre (IFSC).

• IIBX has enrolled jewellers to trade on the exchange and set up the infrastructure to store physical gold and silver.

• All contracts are listed, traded & settled on IIBX are in US Dollars

How will it work?

• Once gold is imported, it will be stored at the IFSC Authority-approved vault.

• Following this, a bullion depository receipt will be made and the gold will be ready for trading.

• Being a spot exchange, all the open positions will be marked for delivery at the end of the day.

Advantages

• It will be a gateway for bullion imports into India, all bullion imports for domestic consumption will be channelised through the exchange.

• It will offer the advantages of price discovery, transparency in disclosures, guaranteed centralised clearing and assurance of quality.

• The IFSCA has ensured sourcing integrity of the bullion delivered through IIBX.

• This will lead to quality assurance.

• Moreover, with this being a free trade zone, no duty will be paid.

• Exchange at IFSC will not have any impact on gold futures as it is a tool for hedging.

• The spot exchange will be used by the industry for sourcing the yellow metal.