(Kitco News) – A perfect storm of rising demand and higher import taxes is once again driving India’s black market for gold with smuggling on the rise.
Mumbai’s Chhatrapati Shivaji Maharaj International Airport announced its biggest single-day gold bust on record last Friday. In two separate operations, customs officers seized 61 kilograms of gold valued at more than $3 million.
A total of seven passengers were arrested as a result of the two operations.
In the first bust, four Indian nationals coming from Tanzania were arrested after customs officials found 53 kilos of gold concealed in specially designed belts and pockets wrapped around their bodies.
On the same day, authorities confiscated 8 kilos of gold from three passengers arriving from Dubai. This time, the gold was encased in wax and hidden in the waist of their pants.
Smugglers have become very creative when it comes to bringing gold into India Illegally. Some have hidden gold paste in underwear and bras, wigs, strollers and wheelchairs. They have also sprinkled gold dust on various pieces of clothing. And there is also the tried-and-true method of smuggling gold up rectums.
Along with airports, India sees significant smuggling through its land borders with Bangladesh and Myanmar. According to government reports, 121 kilograms of gold were seized during 11 instances in the north-eastern region.
Smuggling in India has also picked up after the government raised the import duty on gold in July to 12.5%, up from 7.5%. The Indian government targeted gold imports as a way to reduce its massive trade deficit. In August, the nation saw its trade deficit widen to a record $30 billion.
While down from its record highs, India’s trade deficit remained very wide in October at nearly $27 billion.
In another move aimed at gold, on Tuesday the government said it was raising the base import price for gold to $570 per 10 grams, up from $531. The base import price for silver will also rise to $702 per kilo, up from $630.
The government revises base import prices on various commodities every two weeks. These prices are used to calculate the amount of tax an importer needs to pay.
The gold market has seen substantial consumer demand from India. The World Gold Council said in a report published at the start of the month that jewelry demand in India rose by 146.2 tonnes in the third quarter, a 17% increase from last year, and its highest level since 2018.
“Urban consumers were the engine of Indian demand in Q3, encouraged by a return to pre-COVID levels of economic activity,” the report said.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
Read More:India customs agents seize more than $3 million in gold at Mumbai airport as precious metal smuggling increases
2022-11-15 19:56:00
