Import curbs see spurt in gold smuggling

• Smugglers trying new methods to bring in yellow metal

• 43 kg gold worth Rs 41 crore seized since April 2013 at RGIA

Hyderabad: Every other day an air passenger is caught for trying to smuggle in the precious yellow metal into the country.The Rajiv Gandhi International Airport (RGIA) police booked some 27 cases of gold smuggling and seized around 43 kg of gold worth Rs 41 crore since April 2013. However, this is said to be only a tiny portion of the actual quantum of gold being smuggled into the country.

The spurt in gold smuggling is seen after India has been forced to impose curbs on gold to overcome high trade deficit and a plunging rupee against the dollar. A record high import duty of 10 per cent and a rule tying import quantities to export levels affected gold supply, in what was until a year ago the world's biggest bullion consumer. This has prompted a sharp rise in smuggling.

According to World Gold Council’s (WGC) quarterly report issued on Tuesday, the bullion demand in India rose 13 per cent last year to 974.8 tonnes, clearly indicating that the consumer appetite for gold has been largely unaffected by government restrictions on gold imports.

Indian gold consumption is expected to be 900-1,000 tonnes in 2014 for jewellery and investment purchases that is slightly behind top gold buyer China, whose demand is expected to be 1,000-1,100 tonnes, according to the WGC.

In order to avoid being caught, gold smugglers are using new techniques even avoiding same arrival destinations in the country.

In most of the cases, the yellow metal is being smuggled in from Singapore, Thailand and Dubai. Though Dubai has been the desired hub of smugglers, now, with the customs sleuths profiling frequent fliers from Gulf countries, the smugglers changed their modus operandi and started bringing in gold from Australia via Singapore, Malaysia and Thailand, almost at Dubai price to escape from customs officials.

Additional Commissioner, Customs, R Manohar, said, "A blanket ban on the import of gold is one of the reasons. Also there is an enormous gap between supply and demand for gold. Acute shortage of gold in domestic market has also led to rampant smuggling. The smugglers buy gold at cheaper rates overseas and sell it to domestic jewellers or agents and take home a good premium. Successful smuggling of 1 kg gold would directly give the passenger Rs 3 lakh premium that they evade by not paying import duty of 10 per cent.” Furthermore, gold was cheap in other countries, he said adding that profit motive was precisely one of the reasons. The Reserve Bank of India (RBI) has imposed a lot of restrictions on gold imports and the flip side of restrictions increased gold smuggling and increased 'parallel market' activity, he said.

Of late, passengers devised unique ways of smuggling the yellow metal, including hiding it in dates by replacing with gold beads. Some were found concealing gold bars in rectum and other orifices, similar to those followed by drug smugglers.

Smugglers are now turning their attention towards Non-Resident Indians (NRI) to bring in gold after paying duty. “Any NRI who has stayed abroad for more than six months, is allowed to bring in a kg of gold by paying tax in foreign currency,” Manohar said. Customs officials also claim that their job has been made tougher by the Supreme Court ruling allowing bail for gold smugglers and those violating Customs Act.

While some civilians try to smuggle gold to save money, many work in a nexus as 'carriers', Manohar pointed out. Explaining the various sections of the Customs Act of 1962, he said that officials seize the gold under Section 110 and arrest the accused under Section 104 of the Act.