After being at the forefront for almost a decade, Somasundaram PR, regional director general of the World Gold Council, will hang up his boots. He played a key role in supporting many structural reforms in the domestic gold market, such as mandatory hallmarking, the growth of digital gold and the establishment of the India International Bullion Exchange at Gift City. It should contribute to the creation of a self-regulatory organization for the sector. activity area spoke to Somasundaram on the way forward. Extract:
How do you see your time in India?
If I look back, we never thought that there would be mandatory hallmarking or HUID (Unique Hallmark Identification) or IIBX (India International Bullion Exchange) or SEBI would support e-commerce and issue a document on EGR (electronic receipt of gold). Obviously, it wasn’t easy. We have thriving testing centers with good delivery standards in India. It is planned to create an SRO. The industry is now ready to undertake better reforms. The new India is much more confident. India takes a stand on many global issues and dictates its terms. However, when it comes to gold, we are lagging behind. We are not talking about setting global standards. We are still struggling with taxes. This will change. India’s dominant position affects the gold industry, not only in India but globally. A 1 percent tariff cut won’t matter much. We are going to talk about sustainable sourcing and recycling to become a shopping center. We are moving forward in organized retailing and so there will be a lot more innovation in terms of adopting best practices. Digital transactions will gain momentum as efforts are made to reduce the use of cash. However, this industry is accustomed to cash transactions. There will therefore be a certain convergence of national priorities. The next five to ten years will be very interesting.
Are there any global SROs in this sector?
We carried out a study across the world and looked at different models. We cannot simply adopt a model in this industry because it has particularities. For example, the AMFI (Association of Mutual Funds in India) model was considered, but mutual funds are regulated by SEBI. We also considered the model of the automobile association and Nasscom (National Association of Software and Services Companies). However, these industries are more organized. We need to adopt best practices from these industries. Gone are the days when we could have distinct quality for export and domestic markets. It’s not like the government can dictate every aspect of the industry. There is no need. Industry can suggest best practices. I don’t think this will all fall into place on day one.
Has the industry fully adopted HUID?
Initially the industry had a lot of problems, but it’s now fully accepted, but there are still skeptics who say these numbers can be replicated. A small part of trade will continue to dilute the reforms introduced with some practices that are not very good. In fact, at one of the conferences there was an interesting discussion about small single outlet owners versus big brand players. Owners of unique outlets said this brand had leveled the playing field and made them more competitive. Unlike big brand players, small players can customize buyers’ design requirements and take new orders based on customer needs. Punching is no longer a problem.
How do you see gold prices this year?
This is very difficult to predict because elections are planned in India and the United States. What happens in the US election will have a much bigger impact on global prices. There are wars going on and this has been completely ignored. If it takes a bad turn, that could also have an impact. We find ourselves in a unique situation where interest rates, stock markets and gold prices are all at high levels. We’ve always heard that gold does well when stock markets are down or interest rates are low. I can’t speak to 2024 prices, but given the global situation, gold prices are not going to drop drastically over the next few years. People will buy more gold as they become prosperous. Central banks buy at these prices even if their decisions do not depend on prices. According to our survey, central banks have shown a positive propensity to buy gold over the next 12 months and over 24 months.
What can push the industry to the next level?
The industry should focus more on design and work on the manufacturing aspect. This should not be a “one size fits all” approach. Can we have a flexible design with many moving parts. This requires a lot of thought. With 100 different parts, can the industry make five best designs. This cannot come from people working in the gold mining industry. We will need to bring in design experts from other sectors. We need innovation centers where people from different sectors can share their views.
