B. N. VAIDYA & ASSOCIATES EXPECTATIONS & CONSTRAINTS OF BULLION TRADE - BHARGAVA N. VAIDYA e – mail 30 th October 2004.

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B. N. VAIDYA & ASSOCIATES EXPECTATIONS & CONSTRAINTS OF BULLION TRADE - BHARGAVA N. VAIDYA e – mail 30 th October 2004

B. N. VAIDYA & ASSOCIATES INDUSTRY TARGET MAKE INDIA No. 1 BULLION DEALING CENTER TO UTILISE INDIA’S VAST GOLD ASSET IN PRIVATE SECTOR TO ACHIEVE A POSITION SIMILAR TO DIAMONDS IN JEWELLERY

B. N. VAIDYA & ASSOCIATES HISTORY Net Gold Surplus – for years Gold Control Act. Development 1990 – Abolition of Gold Control Act 1992 – NRI Imports 1994 – SIL Import 1997 – Authorised agencies / Banks Future/Forward trading in bullion ????

B. N. VAIDYA & ASSOCIATES EXPECTATIONS FREE TWO WAY BULLION TRADE PAPER BULLION REFORMS BANKING & FINANCE INFRASTRUCTURE UPGRADATION BULLION BANKING - REFORMS INTERNATIONAL BULLION EXCHANGE

B. N. VAIDYA & ASSOCIATES FREE TWO WAY BULLION TRADE FREE IMPORTS OF BULLION AS IN ANY OTHER COMMODITY EXPORT OF BULLION ** ZERO IMPORT DUTY ***

B. N. VAIDYA & ASSOCIATES PAPER BULLION REFORMS G.A.P. EXCHANGE TRADED FUNDS COLLECTIVE SAVINGS SCHEMS PAPER TRADING

B. N. VAIDYA & ASSOCIATES BANKING & FINANCE Limits for Bullion Dealers / Jewellers Export Finance for Jewellers / Manufactures Supporting Industry Brokers / Refining / Hallmarking.

B. N. VAIDYA & ASSOCIATES INFRASTRUCTURE INSURANCE ASSAYING FACILITY TRANSPORTATION CUSTODIAN / DEPOSITORY SERVICE REFINING SUPPORT SERVICES

B. N. VAIDYA & ASSOCIATES MATURED BULLION BANKING METAL ACCOUNTS MARGIN TRADING SPECULATIVE AND HEDGING ACCOUNTS BULLION AS A FINANCIAL PRODUCT TAPPING OF INDIA’S VAST BULLION RESOURCE

B. N. VAIDYA & ASSOCIATES RETAIL BULLION BANKING GOLD ACCUMULATION PLAN / SAP GOLD - CERTIFICATES / GIFT VOUCHERS GOLD E-COMMERCE PRODUCTS GOLD DEBIT / CREDIT CARD

B. N. VAIDYA & ASSOCIATES INTERNATIONAL BULLION EXCHANGE EXCHANGE TO TRADE SPOT FUTURES OPTIONS BULLION RELATED PRODUCTS NO LOCAL TAXES

B. N. VAIDYA & ASSOCIATES INTERNATIONAL INVESTOR / DEALER FRIENDLY EASY ACCESS TAX FRIENDLY TRANSPARENT MULTI CURRENCY SETTLEMENT

B. N. VAIDYA & ASSOCIATES INTERNATIONAL METAL DEPOT Off shore vault for International exchange, Associations & Banks Supply to Domestic Market Export to SAARC & Middle East Transfer of Stock between International Bullion Houses.

B. N. VAIDYA & ASSOCIATES IMPORTANCE OF GOLD IN INDIA Largest item in portfolio (Rs.13,02,000+ Crores) Major forex asset ($ 280+ Billion) Liquidity

B. N. VAIDYA & ASSOCIATES PRESENT BULLION PIPELINE Authorised Bank / Agency | Bullion Dealers (Large) __ __ __ __ | | Bullion Dealers (Small) | || | Jeweller| Jeweller || | Consumer / Investor

B. N. VAIDYA & ASSOCIATES DIRECT INCENTIVE ACTIVE ROLE BY RESERVE BANK of INDIA Incentives for Gold Deposit Schemes & G.A.P. Support International Metal Depot INCENTIVIES & TAX Sops for all players of Gold Deposit Schemes & G.A.P.

B. N. VAIDYA & ASSOCIATES CONSTRAINTS CASH MANAGEMENT LOCAL TAXES COMPLEXITIES CONTROLS & SUPERVISION GOLD LOAN RISTRICTIONS REPUTATION IN EYES OF AUTHORITIES

B. N. VAIDYA & ASSOCIATES CASH MANAGEMENT Handling Cash Cash Deposit with Banks Poor Banking System in Rural Area Difficulties in Easy Transfer of Funds Replacing Hawala – History

B. N. VAIDYA & ASSOCIATES TAXES IN DOMESTIC TARIFF AREA State Levies : Salestax / VAT / Turnover tax / Surcharge Entry tax / Right to use Act- Tax / Stamp Duty Local Levies : Octroi / Cess Central Govt. Levies : Custom Duty Income-tax/TDS Surcharge With holding Tax / Central Sales Tax Stamp Duty / Excise CONTROLS & SUPERVISION Reserve Bank of India Forward Market Commission – Consumer affairs Ministry Customs/Financial Ministry DGFT Commerce Ministry State Government Local authorities

B. N. VAIDYA & ASSOCIATES CONTROLS & SUPERVISION Reserve Bank of India Forward Market Commission – Consumer affairs Ministry Customs – Financial Ministry DGFT - Commerce Ministry S.E.B.I. State Government Local authorities

B. N. VAIDYA & ASSOCIATES Advantages Of Gold Loan Free from Gold Price Risk Reduces Cost of Holding Jeweller to Profit from Design & Labour

B. N. VAIDYA & ASSOCIATES REPUTATION REPUTATION IN EYES OF AUTHORITIES CONSUMERS INTERNATIONAL DEALERS

B. N. VAIDYA & ASSOCIATES RATIONALISATION Tax / Duty Rationalisation Reduction in Number of Agency Controlling Treat Gold as Currency so only one agency controls No Tax on Primary Gold

B. N. VAIDYA & ASSOCIATES External Benefits L C Imports / Interest Arbitrage Export of Coins / Crude Jewellery Other Arbitrage

B. N. VAIDYA & ASSOCIATES Discipline Money Laundering K Y C Transfer Pricing SRO

B. N. VAIDYA & ASSOCIATES