Gold Smuggling – A big challenge

To save the economy, the Government has increased import duty on the yellow metal which has led to smuggling of gold in India. With gold import curbs to check deficit, gold smugglers are back in business. Earlier it was observed that only the industry was suspicious regarding the smuggling of gold but Government agencies like Directorate of Revenue Intelligence (DRI) are claiming it too. The Mumbai airport customs has seized around 73 kilograms gold worth Rs. 19.71 crore between April and October this year, more than double the quantity (31 kilogram gold worth Rs. 9.8 crore) it had seized during the same period last year. According to WGC, approximately 200 tonnes of gold is expected to be smuggled and major cities like Mumbai, Jaipur, Kolkata and Channai are the main targets.

According to Mohit Kamboj, President, Bombay Bullion Association, India’s gold imports have been around 250 tonnes every quarter and 800-1000 tonnes every year. But in the last quarter; only 20-25 tonnes of gold was imported. According to GJF chairman Haresh Soni, A certain rise has been observed in terms of smuggling of gold which has caused a negative effect on the industry. It has now become difficult for those following ethical way of business to source raw material. By paying 16 percent import duty, gold on a large scale is imported from the southern zone. Approximately 62 kilograms of jewellery was imported in the span of 10 days i.e. from December 1, 2013 to December 11, 2013.

A recent discussion was conducted by CNBC awaaz on the same and the panel included Haresh Soni, Mohit Kamboj and G Chandrashekhar. Demand for gold jewellery among Indian consumers remains strong, but reduced supply has prevented this demand from being fully realised during the third quarter. Jewellers are taking premium on gold and according to them if the import duties would not be this strict, the price of gold would be less then Rs. 24000.