Smugglers may cash in on dip in gold imports
Even though bullion traders are expecting gold imports to nosedive by 40% this year on the back of prohibitive prices of the yellow metal and an uncertain monsoon, financial intelligence agencies believe the demand has not decreased so drastically and that the shortfall in the figures may be being filled in by smuggling.
With duty on gold increased to eight times in this year's budget (from 0.5% to 4&), agencies believe the new policy is encouraging gold smuggling to some extent. The Directorate of Revenue Intelligence (DRI) on Thursday arrested a person at Jaipur airport with 2.5 kg gold hidden in his socks.
Investigations revealed that the accused has smuggled gold 20 times in the past few months alone. "The case is a clear example of a spurt in gold smuggling this year. The fact that the accused has made 20 such trips in the past one year shows there is a demand for smuggled gold," said a DRI official.
In the present case, the accused identified as one Syed Ahmed Altaf was coming from Dubai by Oman Air when he was intercepted by DRI's Delhi Zone officials at Jaipur airport. A search revealed he had hidden 247 gold chains in his socks. Altaf, who hails from Karnataka, revealed that he had already made 20 such trips from Dubai.
"The jewellery is made of 18-22 karat gold and is worth around Rs 85 lakh. He has been arrested under section 104 of the Customs Act," said Additional DG (DRI, Delhi Zone) R K Sharma.
Sources said the gold market has seen unusually low demand with import expected to plummet to 450 tonnes in the first nine months this year compared to 753 tonnes in the year-ago period.
The market has attributed this to exorbitant price of the metal (at Rs 30,000 a tola) and an uncertain monsoon, which is making rural India hold on to cash. With increasing seizures of undeclared gold carried by couriers at various airports, agencies believe smuggling is on the rise and may explain the shortfall in legal import.
This year, government has increased duty on gold twice. First from a flat Rs 300 per 10 grams to 2% of the value and then the same was increased to 4%. This, agencies believe, may have led to a spurt in smuggling as it also leads to difference in prices of gold in India and other countries.