As part of its Budget 2020 proposal, the government on Saturday proposed to set up an international bullion exchange at International Finance Service Center (IFSC) in Gujarat International Finance Tec (GIFT) City, which will lead to better price discovery of gold, create more jobs and enhance India's position in such market.

"With the approval of the regulator, GIFT City would set up an International Bullion Exchange(s) in GIFT-IFSC as an additional option for trade by global market participants," Finance Minister Nirmala Sitharaman said while presenting the Budget for 2020-21.

This will enable India to enhance its position worldwide, create jobs, and will lead to better price discovery of gold, she added.

The country's only IFSC is in GIFT City near Ahmedabad in Gujarat. IFSC has the potential to become a centre of international finance and high end data processing, the minister added. It has 19 insurance entities and 40 banking entities. IFSC has also provided for setting up of precious metals testing laboratories and refining facilities.

Bullion trade experts welcomed the proposal however they said, “Though India is the second largest consumer of Gold, it has miles to go in becoming “price setter” from its current status of price taker”.

The budgetary announcement is in line with Prime Minister (PM) Narendra Modi's vision that GIFT City would become a price setter in some of the world's largest traded instruments in the next 10 years.

"We welcome the announcement in today's Union Budget on setting up of an International Bullion Exchange at GIFT IFSC," said Tapan Ray, MD and Group CEO at GIFT City.

"Finance Minister has re-emphasised the importance of GIFT IFSC as an emerging global financial services hub. The policy pronouncement regarding GIFT IFSC gives a tremendous boost to investor confidence both in India and abroad," he added.

V Balasubramaniam, MD and CEO of India International Exchange said they are keen to set up the international bullion exchange at GIFT IFSC.

The finance minister said in recent years there has been a surge in trading volumes of Indian rupee in the offshore financial centers. The government and the Reserve Bank have taken various measures to permit Rupee derivatives to be traded at IFSC.