Gold News

Gold Bullion Smuggling Rises After India Hikes Gold Import

INDIA'S increased duty on gold imports from 6% to 8% has seen a rising amount of smuggling, custom officials have reported. 

Two men were found smuggling 2.6 kilograms of gold worth $110,000 at the IGI airport in Delhi. A man from Uttar Pradesh was also arrested, carrying gold worth $35,000 hidden as silver coloured pins on the box of a TV he was legally importing from Dubai.

The pins were checked and found to be gold. In another event, a resident of Karnataka was found trying to smuggle 1.9 kg of gold jewellery wrapped around his legs. 

India is the world's biggest gold bullion consumer. In the past 18 months, the tax on gold imports has gone from 2% to 8% in the hope of reducing inflows, blamed as the main reason for India's current account deficit. 

The rise in import duty has had little impact, however. According to Reserve Bank of India data, in May 2013 India imported 162 tonne of gold versus 142 tonne in April.

The Indian press reports numerous other arrests, which have "led to fears of more black money getting infused into the economy," according to an official of the Directorate of Revenue Intelligence.

But the government is more concerned, he told the Times of India, about India's rising current account deficit – with money flowing out of the country to pay for smuggled gold – than about the black market economy.

"Black money in any case is not being accounted," said the official. "The government would rather have white money shift away from gold to give a spurt to the economy."

Aurelie Zoetelief Tromp is working as a research assistant at BullionVault, the No.1 gold and silver ownership service for private investors.


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