Financial intelligence agencies are alarmed by the steep and sudden fall in gold imports recorded for June, suggesting large-scale smuggling of the yellow metal since import duty was increased from 6% to 8%. Gold imports fell by 80% from 160 tons in May to only 31 tons in June barely a month after the new import duty for gold, RBI curbs on banks and government ban on sale of gold coins and bars came into force.
While statistics look promising for a yawning current account deficit ( CAD) contributed significantly by India’s love for gold, agencies warn that dip in imports does not reflect a dampening demand and thus large amounts of gold are being smuggled.
“Though curbs on sale of gold bars and coins and increased duty have brought the demand down a bit but not more than 20%-30% on an average. But imports have dropped by 80%. This simply means the rest is being smuggled,” said a senior officer from Directorate of Revenue Intelligence (DRI).
Not surprisingly, in the past two months alone, the agencies have seized 150 consignments of gold totalling over 500kg at various airports and sea ports. “Not that we are aggressively pursuing gold smugglers. But now the incentive for smuggling is good given that there is a 7% difference in import duty between Dubai and India,” said the officer.
Customs and DRI officials have also found that smugglers are increasingly using unique modus operandi. Customs officials recently apprehended a gold consignment at Delhi’s IGI Airport coming from Dubai where the smuggler had converted gold bars into staple pins with silver coating. These pins were stapled on the boxes of TVs he was legally importing.
In another case in Ahmedabad, DRI officials apprehended a consignment where capacitors of picture tubes of TV sets were made of gold. “Unless you have specific information you can’t catch such consignments. Who would break open a TV and look at the capacitor of its picture tube for smuggled gold. Though we have had good success, we believe a lot of consignments are finding their way into the country,” said the officer