All You Need to Know About Gold Exchanges in India

Gold, the “safe haven," is simultaneously a store of savings, a cultural necessity, a bridal tradition, a hedge against inflation, and an asset class all at once. To fulfil all the Indian gold demand, the government imports 700 to 800 tonnes of gold every year (approx.) [Source: Moneycontrol].

Yet for most of this history, gold trading in India has been fragmented, opaque, and largely informal. 

Prices varied city by city. Purity was uncertain. 

There was no standardised delivery mechanism. Gold moved through a long chain of importers, wholesalers, and local bullion dealers, each adding a margin and reducing transparency. 

The lack of a unified exchange also meant India was a price taker, not a price setter, in global bullion markets, despite being the world’s largest gold consumer. 

To solve all these structural problems, India's gold exchange architecture has been built over nearly a decade. 

The Gold Exchange Regulatory Journey 

Union Budget 2018-19: The Government announced the establishment of a system of consumer-friendly and trade-efficient regulated gold exchanges in the country

In the Union Budget 2021, Finance Minister Nirmala Sitharaman formally announced SEBI as the designated regulator for gold exchanges, with WDRA (Warehousing Development and Regulatory Authority) to support the broader commodity ecosystem, including vaulting, assaying, and logistics.

May 2021: SEBI issued a consultation paper proposing the framework for gold exchanges and draft regulations for vault managers.

January 2022: SEBI issued a circular specifying the framework for operationalising the gold exchange in India. On the gold exchange, ‘Electronic Gold Receipts’ (EGR) will be traded, which are referred to as ‘securities’ under Section 2(h)(iia) of the Securities Contracts (Regulation) Act 1956. 

July 2022: PM Modi launched the India International Bullion Exchange (IIBX) at GIFT City, Gujarat, India's first international bullion exchange, regulated by the International Financial Services Centres Authority (IFSCA).

October 2022: BSE launched India's first EGR segment during Muhurat trading on Diwali. 

November 2025: SEBI issued an advisory cautioning investors about the unregulated nature of digital gold, clarifying that it does not fall under its purview as a regulated security and is not covered by existing commodity market rules, unlike gold ETFs/mutual funds and EGRs.

May 2026: NSE introduced EGRs as a new trading segment. 

What Is a Gold Exchange? 

A gold exchange is a regulated marketplace where gold is bought and sold in a standardised, transparent, and organised manner, much like how stocks are traded on a stock exchange, NSE/BSE. 

On the exchange, electronic gold receipts (EGRs) are traded. These are the core instruments of India’s gold exchange framework.

What Are Electronic Gold Receipts (EGRs)? 

An EGR is an electronic receipt that represents ownership of physical gold stored in secure, SEBI-accredited vaults. 

Instead of holding gold in physical form, investors can buy and sell EGRs on stock exchanges just like shares. 

The Key Advantage of EGRs: Physical Delivery

What sets EGRs apart from every other digital gold instrument is the physical delivery option. EGRs can be converted back into physical gold by placing a withdrawal request with the vault manager. 

How Electronic Gold Receipts Work?

Electronic gold receipts work in a three-stage life cycle. 

• First Stage→EGR Creation

At the very first stage, the investor deposits their physical gold with a SEBI-accredited vault instead of holding it themselves. 

Then, the vault manager records all relevant details into a common interface and generates the EGR. The newly created EGR then appears in the depositor's demat account, held through a depository participant (NSDL/CDSL). 

• Second Stage→EGR Trading

Once an EGR is tradeable, it behaves like any other exchange-listed security. Stock exchanges allow continuous trading; buyers and sellers can transact through their brokers during market hours, with price discovery driven by domestic supply and demand.

• Third Stage→EGR Conversion to Physical Gold 

When a beneficial owner wants their physical gold returned, they submit a withdrawal request to the depository. The depository forwards this to the vault manager, who then arranges physical delivery of the gold to the investor. 

Challenges Ahead

India's gold exchange ecosystem has made remarkable structural progress. But significant challenges remain. 

• Liquidity: It is by far the most prominent challenge. EGRs remain relatively illiquid when compared to gold ETFs. Tight bid-ask spreads require active market makers and substantial volume. 
• Vault infrastructure: Primary vault cities are currently Delhi, Mumbai, Ahmedabad, and Chennai. For investors outside these centres, physical deposits and withdrawals are inconvenient.
• Broker enablement: Not all NSE-connected brokers have enabled EGR trading for their clients yet.