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Implementing gold sourcing standards important to bring transparency into the sector, reckon industry experts

With the presence of several gold manufacturers and bullion refineries, India has emerged as a hub for gold refining. The country has 32 gold refineries, with a total refining capacity of 1,467 tonnes.

At this juncture, there is a need to implement gold sourcing standards. Based on the guidelines set out by the organization for economic co-operation and development (OECD), the sourcing standards are also known as Indian responsible mineral sourcing guidelines.

India is also home to the largest hoarders of gold in the world. So, there is a need to set separate norms, suggest experts at Rajesh Exports. The bullion refiners have been given a deadline of May 2018 to register with the same.

It is believed that setting up these standards will lead to transparency in mineral supply chains, as well as sustainable corporate engagement in the mineral sector. In the first phase, norms for dore or unrefined gold will identify that it is not imported from mines that use child labour. It will also ascertain if the money is used for terrorist funding or illegal activities. The working committee’s first meeting for the guidelines decided the regulatory model would be in line with the London Bullion Market Association.

According to the analyst at Rajesh Exports, the implementation of guidelines will be beneficial for Indian refiners, as it will help them increase their presence worldwide. It will also help the refiners in meeting the expectations of banks, customers and clients across the globe. “The OECD guidance is flexible and can be adapted to specific market characteristics in India, as has been done in London, Dubai and China. This flexibility includes adapting approaches to build on existing checks on imports of bullion and gold dore,” said Tyler Gillard, head of the responsible business conduct unit, investment division, directorate for financial and enterprise affairs, OECD.

Apart from this, India will also have standards for gold refineries after the compilation of dore import norms. Around 25,000 tonnes of gold are held by households in the country and the old gold must be taken into account that is sold in the market. India should be able to export gold, once these norms are in place.

Rahul Gupta, the director of bullion federation said, “The government should at some point in time consider allowing export of gold bars refined by Indian refineries after the country implements responsible gold sourcing guidelines.” The Bullion Federation has provided its feedback on the draft guidance prepared by India Bullion & Jewellers Association. This shall become the starting point on creating IRMS Guidelines, reckon industry experts at Rajesh Exports.

“It is now up to the Indian industry to work together and develop the Indian guidelines, and more importantly, a robust audit mechanism. We encourage any audit of refiners to be overseen by a group of industry associations,” concluded Gillard.

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