World Gold Council SRO, Gold Industry: Somasundaram PR, CEO of the World Gold Council, has led the organization to unprecedented success during his tenure. Under his guidance, the World Gold Council has achieved remarkable milestones, ushering in a period of growth and innovation in the gold industry. In an exclusive interview with Virendra Vyas, Editor of Gold Silver News, Somasundaram PR discusses key topics such as gold demand, taxation policies affecting gold, and the establishment of the Self Regulatory Organization (SRO). Additionally, as he prepares for retirement this year, he reflects on his remarkable 10-year journey with the World Gold Council, encapsulating the milestones and challenges encountered along the way. Here are some excerpts from the interview.
Virendra: What are your expectations for gold demand this year?
Somasundaram PR: India will see a very significant jump in demand, whether it will happen in 2024 or 2025. From what I have observed, the interest in gold is very strong, so at some point, it will translate into real buying. Two things are important: first, the economy is doing well, and second, gold is also performing well. Gold demand is influenced by income growth. We still have a large number of people moving from the bottom of the pyramid to the middle class. Their first asset class is gold, so as the economy performs, we expect to see demand for gold. In India, now all the gold need not be imported immediately; we also need to work on recycling.
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Virendra: What are your opinions regarding the high tax on gold in India?
Somasundaram PR: I have said in many places that the tax on gold is 18.5 percent in India, which includes customs duty plus GST. That is very high. Let’s understand who sells this grey market gold. So the industry also needs to take steps to control smuggling. Therefore, it is important to consider what is a reasonable amount of duty on gold. Eighteen point five percent is too high; we should definitely bring it down, and it should be supported by the industry. The industry should avoid the grey market and we should ensure that exports increase.
Virendra: Can you explain to our readers about SRO and how it will work?
Somasundaram PR: The program is called Swarna Aadarsh Abhiyan, and we’ve established the SRO (Self Regulatory Organisation). We’ve engaged a brand agency to create a distinct brand for the gold industry. This serves as a common platform for all jewelers, refiners, hallmarking agencies, and stakeholders across the supply chain. The SRO, a not-for-profit organization initially supported by industry, aims to become self-sustaining over time. It will develop and promote best practices, codifying and disseminating them gradually. Those who adhere to the code of conduct will receive the Swarna Aadarsh Abhiyan stamp, signaling their commitment to global best practices. This stamp instills trust in both consumers and industry participants, assuring quality practices. While it will take time and awareness campaigns, the SRO aims to become an independent entity, separate from the World Gold Council and any other entity, serving as the umbrella organization for the entire gold industry. An independent advisory board will also be established.
Virendra: What about the Chairman?
Somasundaram PR: We are currently in discussions with potential candidates for the Chairman position. The process will proceed gradually, starting with awareness campaigns and the establishment of a code of conduct. Additionally, a CEO will be appointed for the organization in the coming months. Expect some announcements from us in the near future.
Virendra: What entities are eligible to participate in the SRO?
Somasundaram PR: When you adopt this code of conduct, you will sign an agreement stating that you will follow all the practices. The SRO will then provide you with the symbol. So, if I am a consumer from any part of the world, I will look for this symbol when buying gold. The SRO will advertise to consumers to look for this symbol as a mark of best practices. Consumers will then visit such stores. We are developing a uniform brand so that any consumer who sees this logo doesn’t have to worry; they can go ahead and make their purchase. The good practices will also be publicized by the SRO. Therefore, consumers will be directed to your shop because they know there is an independent SRO certifying that you are following these good practices. Since our business is not regulated, we are proposing self-regulation. These practices will be audited, and there will also be a grievance redressal system.
Virendra: Over the next 15 years, what transformative impact do you anticipate the SRO will have on India?
Somasundaram PR: The vision is that anybody who is conducting a transaction in gold in India will be part of the SRO. That is our vision. The code of conduct is crucial. People should know that if a bullion dealer is present, they follow all the good practices. What India produces will also be globally acceptable. This will enhance India’s image in the world, leading to increased exports. We will be the first SRO in the gold industry, allowing us to take a leadership position globally through this retail-oriented Self-Regulatory Organisation. We believe it will also help in capturing a larger share of the global jewelry market, and India will definitely become a prominent trading market with IIBX. In 15 years, no consumer in India should buy any product from a person who doesn’t follow the good code of conduct.
Virendra: Tell us about your 10-year journey, experiences, and learnings as you are retiring from the World Gold Council.
Somasundaram PR: When I entered in this industry, I was not from a jewellery background. I came from a banking background, before that I worked for Unilever, an FMCG company. Initially, I was unsure of what I could contribute. To summarize these 10 years – lots of friends, a wonderful industry, so much knowledge but no synergy. That’s why I am talking about the SRO. But extremely good entrepreneurial skills and huge potential for this industry, which in my opinion is not being tapped because we do not have proper corporate structures. We are very internally focused. Overall, it has been a wonderful experience for me. We have received support from everyone in the last 10 years. All the associations came together on one platform, whether it was for gold policy, the India Gold Policy Centre, training institutes, exchanges, electronic gold receipts, or mandatory hallmarking. I have seen so many things in the industry. I have seen many changes in the last 10 years. There is still a lot of work to be done, and I am sure the people in the World Gold Council and the associations will do much better work in the future. But I am very, very happy to have entered this industry and built relationships. You Can Watch His Full Interview here