The Bullion Market in GIFT IFSC: Exchange, Depository Receipts and Who May Import Gold

India is one of the world’s largest gold markets, and for most of its modern history gold entered the country through a narrow channel: nominated agencies notified by the RBI or the DGFT. GIFT IFSC changed that by creating a second channel, built on three legal moves made between 2020 and 2022, and now consolidated in the IFSCA (Bullion Market) Regulations, 2025.

The Three Foundations

Jurisdiction. By a notification of 31 August 2020, the Central Government extended IFSCA’s powers and functions to bullion spot delivery contracts and bullion depository receipts. Without that step, bullion would have sat outside IFSCA’s perimeter, which is defined by financial products and services (Article 1).

Securities characterisation. By a notification of 24 December 2021, bullion depository receipts (BDRs) and bullion spot delivery contracts were notified as securities under the Securities Contracts (Regulation) Act, 1956. This brought the exchange, clearing and depository architecture of securities law to bear on physical metal.

Market infrastructure. The India International Bullion Exchange IFSC Limited was granted recognition as the bullion exchange and bullion clearing corporation on 10 December 2021, with renewal notified in December 2022.

The 2025 Regulations

The IFSCA (Bullion Market) Regulations, 2025 were made under the IFSCA Act together with sections 4, 8A and 31 of the SCRA and sections 23G and 25 of the Depositories Act. They provide the framework for recognition of bullion exchanges and bullion clearing corporations, and registration of bullion depositories and vault managers.

Key structural features include the following.

Capital. A bullion exchange must maintain a minimum net worth of USD 10 million at all times, and so must a bullion clearing corporation. Distributions to shareholders are restricted until the prescribed net worth is met.

Membership and regulation of members. The regulations define a “bullion trading member” as an entity having trading rights on a bullion exchange, and require the exchange to regulate the working of its trading members, including through inspection and audit of members and intermediaries.

Clearing protections. Collateral, deposits and margins contributed by a trading or clearing member are given priority over other liabilities of, or claims against, that member. This is the familiar default-waterfall protection that makes central clearing viable.

Ownership and governance. The regulations restrict shareholding and control in a bullion exchange and clearing corporation, and contain detailed provisions to keep trading and clearing members, their associates, agents and shareholders out of governance positions, subject to carve-outs for specified institutions. Directors and key management personnel must be fit and proper, must follow a code of conduct, and must report wrongdoing to the governing board or to IFSCA. IFSCA may act, including by removal, after giving an opportunity of being heard.

Segregation of functions. Like securities market infrastructure institutions, a bullion exchange or clearing corporation must segregate its functions into three verticals: critical operations; regulatory, legal, compliance, risk management and customer grievances; and other functions including business development. The first two verticals must receive higher priority in resource allocation, and the adequacy of resources must be assessed periodically and objectively.

Vaults and depositories. The regulations provide for registration of bullion depositories and vault managers, with IFSCA empowered to specify requirements including net worth. The BDR mechanism depends on this: a beneficial owner is the person whose name is recorded as such with a bullion depository, and the physical metal sits with a vault manager.

Who May Import Gold through the Exchange

The commercially transformative provision is not in the IFSCA regulations at all. It is in DGFT Notification No. 49/2015-2020 dated 5 January 2022, which amended the import policy conditions for gold under the relevant ITC(HS) codes.

The revised policy conditions provide that, in addition to nominated agencies notified by the RBI (for banks) and the DGFT (for other agencies), “qualified jewellers as notified by International Financial Services Centres Authority (IFSCA) will be permitted to import gold under specific ITC(HS) Codes through India International Bullion Exchange IFSC Ltd. (IIBX)”. The notification preserves the existing treatment of imports under Advance Authorisation and of supplies of gold and silver, which continue to be governed by the relevant provisions of the Foreign Trade Policy.

The route is no longer confined to gold or to qualified jewellers. Later DGFT notifications, including Notification No. 35/2023 dated 11 October 2023, permit qualified jewellers to import silver under specified ITC(HS) codes through IIBX. IFSCA’s Consolidated Circular of 10 October 2025, updated on 15 June 2026, governs imports of gold or silver by qualified jewellers and by valid India–UAE CEPA Tariff Rate Quota (TRQ) holders through IIBX. After this article’s cut-off, IFSCA’s circular of 22 September 2026 relaxed the eligibility criteria for notification as a qualified jeweller. Entities holding a valid DGFT Advance Authorisation, a Registration-cum-Membership Certificate of the Gem and Jewellery Export Promotion Council, or a DGFT authorisation for specified ITC(HS) codes may now apply, subject to importing only the authorised items, trading through a Bullion Trading Member and, where applicable, using imports only for Advance Authorisation export purposes. The updated consolidated circular should be read as the operative IFSCA text.

Three points follow for a jeweller.

1. Status is regulatory, not contractual. A jeweller must be notified as a qualified jeweller by IFSCA, under the criteria IFSCA specifies, before it can use this route.
2. The route is exchange-specific. The permission is to import through IIBX, not to import generally.
3. The product codes matter. The permission operates under specified ITC(HS) codes; the classification of the metal being imported determines whether the route is available.

Why the Structure Matters Legally

The GIFT IFSC bullion market is an example of a broader technique described in Article 1: the Central Government extends the IFSCA perimeter by notification, characterises an instrument as a security, and then lets securities-market machinery, exchange recognition, clearing corporation obligations, depositories and vault managers, do the regulatory work. The result is that a physical commodity trade is executed, cleared and settled within a framework designed for financial instruments, with the metal represented by a depository receipt.

For a trading participant, this has practical consequences. Disputes and conduct issues arising on the exchange sit within the securities-market framework administered by IFSCA, including the market abuse rules discussed in Article 26 where securities are involved. The tax position of BDRs has been addressed separately: BDRs were notified under section 47(viiab) of the Income-tax Act, 1961, the predecessor of the capital gains provisions now found in the Income-tax Act, 2025 (Articles 7 and 8), and the Income-tax Act, 2025 itself refers to bullion depository receipts in its capital gains provisions.

What Remains to be Checked Before Trading

• Qualified jeweller notification and its conditions, which are set by IFSCA and may be amended.
• Exchange bye-laws, rules and regulations, which the regulations require the exchange to frame and which govern membership, trading, settlement and default handling.
• Customs and Foreign Trade Policy compliance, since the DGFT notification changes who may import and through which venue, but does not displace other trade-law requirements.
• Vaulting and delivery logistics, including the terms on which the vault manager holds the metal and how a BDR is surrendered for physical delivery.

FAQ

1. What are the IFSCA (Bullion Market) Regulations, 2025?

They establish the regulatory framework for bullion exchanges, clearing corporations, depositories and vault managers in GIFT IFSC.

2. What is IIBX?

India International Bullion Exchange IFSC Limited (IIBX) is the recognised bullion exchange and clearing corporation in GIFT IFSC.

3. Who can import gold through IIBX?

Qualified jewellers notified by IFSCA and other eligible participants under applicable provisions, including qualifying India–UAE CEPA TRQ holders, may use the permitted import route subject to the relevant conditions.

4. What is a Bullion Depository Receipt (BDR)?

A BDR represents bullion held through the bullion depository and vault manager framework, allowing the metal to be represented through a depository receipt.

5. What is the minimum net worth for a bullion exchange?

A bullion exchange must maintain a minimum net worth of USD 10 million at all times.