Why is gold smuggling on the rise in our country?
While most experts blame the current import policies, mid-day takes a look into the reasons why smuggling of the yellow metal has been on the rise in the last few months
In the last five months, Terminal 2 of Chhatrapati Shivaji International Airport has witnessed seizure of close to 400 kg gold, approximately worth Rs 100 crore, out of which 100 kg was recovered in this month alone.
A big resurgence of gold smuggling has raised concerns at the Air Intelligence Unit (AIU), with some officials blaming the import policies and others hoping for the situation to get better with the new government in place.
Speaking to experts, mid-day tries to find out the reasons behind the spurt in smuggling of the yellow metal, and looks into some common trends in the seizures made by AIU in the past.
Smuggling usually takes place when the difference in the prices of a commodity at two different places is huge. High import duty and high demand are the chief causes for gold smuggling in India. With last year’s currency crisis and high trade deficit, the government introduced measures to discourage gold imports.
However, since the country is the largest consumer of gold in the world, imports continued and smuggling increased. Nevertheless, the RBI and the government are gradually dismantling restrictions, after the strengthening of the rupee and with foreign exchange coming in. The international price of gold has also come down and our country’s account deficit is much lower. It is, therefore, quite strange that smuggling is still on the rise. I’m sure it will come down soon.
- Dr Ajit Ranade, economist
Gold’s import duty has been constantly increasing, from 4% in April 2012 to 15% at present. Since the value is also increasing, it leads to unofficial import of the metal. As duty has increased from April 2013, customs encountered 664 smuggling cases, worth Rs 208 crore, within six months. However, a couple of days back the RBI stated that it might relax import restrictions, but it has left the final decision with
the country’s new Prime Minister. - Vimal Punmiya, chartered accountant
We have been incessantly appealing to the last government to reduce customs duty. We will be meeting the new government and discussing the issue at hand. By simply looking at the gold, one can’t judge whether it is smuggled or not. Growth in trade has also taken a hit because of this. - Prithviraj Kothari, media spokesperson, Bombay Bullion Associates
Name: Mirza Yasir Hussain
Modus operandi: Gold moulded to make purse handles and belt buckles
Date of capture: December 27, 2013
Amount of seizure: 820 grams, Rs 20 lakh
Hussain, an Indian national, arrived from Bangkok in the early hours of December 27, carrying 820 grams of undeclared gold. The contraband was discovered when Customs officials found two women’s purses with him that seemed to be unnaturally heavy.
They opened the lining of the purses but found nothing. They then realised that the handles were heavier than the bags. After scratching the paint, they found that they were made of solid gold. Hussain’s belt buckle, painted copper brown, was also revealed to be made of gold. The accused, however, insisted that he was carrying the purses on behalf of a friend and was unaware of the gold.
Name: Mohammed Aboobacker
Modus operandi: Gold hidden in backpack
Date of capture: May 11, 2014
Amount of seizure: 13.26 kg, Rs 3.40 crore
Aboobacker arrived from Dubai via Muscat wearing a T-shirt and hanging a pass tag, and tried to walk out like a member of the staff. Customs intercepted 13 gold bars of one kg each and two gold bars of 10 tola each, hidden in his backpack.
Names: Hamida Esmail Zatkal and Ayesha Ismail Zatkal
Modus operandi: Wearing gold bangles
Date of capture: April 9, 2014
Amount of seizure: 1.2 kg, Rs 30 lakh
The mother-daughter duo had arrived from Bangkok when they were intercepted with six crude gold bangles. They were wearing the jewellery, hidden under their full-sleeved dresses.
Name: Muhammed Sheriff Kammadath Abdul Rahiman
Modus operandi: Teamed up with an Air India staff working in baggage department
Date of capture: May 18, 2014
Amount of seizure: 5 kg, Rs 1.27 crore
Rahiman arrived from Dubai and was caught while handing over 5 kg of gold bars to an Air India employee, Ramesh B Bansode. Officials had randomly followed Rahiman and were waiting to see where he was going.
Smuggling has been on the rise because of drastic restrictions imposed on gold imports by the central government and RBI. Since the demand is still rising steadily, illegal imports are now meeting them. - Kiran Kumar Karlapu, assistant commissioner, Customs
Gold smuggled in 2013-14, valued at roughly Rs 86 crore
Gold smuggled in 2012-13, valued at roughly Rs 23 crore
Why do people turn to smuggling?
>> Free trip to Mumbai + free stay + money for the job
>> To take care of family’s finances
>> Low salary
>> Some see it as an easy way to make a quick buck
>> Some offenders start off smuggling tobacco and cigarettes, and then move on to smuggling gold