DW Special: Gold Smuggling On Rise in India

In the recent past, there have been innumerable cases of gold smuggling in India. India’s fascination with the yellow metal is world known and therefore there is unsaturated demand for gold in the country. However, the demand especially from the jewellery industry is not met due to the shortage in supply and thus rise in illegal means to import gold. As Pankaj Parekh, Vice Chairman, GJEPC puts, “This unsaturated demand is fulfilled by the grey market. People are lured to the grey market due to the rising demand.”

The gold seized in over 1,750 cases in 2013-14 was worth over Rs 560 crore, compared to just Rs 99 crore worth gold seized in over 870 cases in 2012-13, says Central Board of Excise and Customs national data. In 2013-14, the Mumbai Airport Customs caught over 346 kg of smuggled gold, compared to 61.66 kg the previous year, says a report.

The sharp increase in duty has lead to a decline in gold imports. This apart schemes like the 80:20 rule wherein importers have to re-export 20 per cent of the gold has added to the trouble. “We have been undertaking more stringent profiling. Also, random checks and screening is done to nab the offenders. Unless there is change in the existing import policy, it is difficult for us to control the smuggling”, said Kiran Kumar Karlapu, Assistant Commissioner of Customs.

This all can be controlled provided the government takes constructive steps to bring down the CAD. As Pankaj Parekh puts it, “From 1992-2011, the gold smuggling was not a reality. However, bad policy brought it back on the scene. GJEPC had given series of suggestion to the taskforce constituted by the UPA government. However, not one of the suggestions has been implemented. I hope that the future government takes care of it”. He further adds remove the import duty which would stop the illegal means to import gold. Also, he feels that the government needs to do away with the faulty 80:20 rule. He further warns that “If the jewellery industry continues to be troubled by the policy makers then it would be difficult for the future generation to hold shop in the industry.”

Gold is an intrinsic part of Indian culture, so just putting a curb on the imports is not going to stop the gold smuggling. Government and the policy makers need to relook at the existing policies and the various norms to put an end to the growing threat to the economy in the form of gold smuggling.