The surge in gold prices and high import duties on the yellow metal has led to an increase in gold smuggling cases across multiple airports in India in recent months. Testimonies from customs and airport officials have revealed that these recent cases involved new and innovative methods of smuggling, such as carrying gold in the form of paste, and the involvement of “well-educated individuals” in the trade.
According to official statistics, gold smuggling cases in India have surged over 20 percent year-on-year till October 2023, with 4,798 documented cases involving seizure of 3,917.52 kg of gold. This is the highest number of gold smuggling cases in at least three years. A closer examination of the data also reveals that Maharashtra has overtaken Kerala to register the highest number of cases of gold smuggling and seizure of smuggled gold till October this year.
The increase in gold prices and high import duties are cited as key reasons for the rise in gold smuggling cases by experts. The World Gold Council (WGC) report in May 2023 highlighted that the rise in gold prices has encouraged smuggling activities, incentivized by an avoidance of import duties. The report also mentioned that this has particularly encouraged demand in smaller cities and among independent retailers, where cash purchases are more common.
Furthermore, the government’s increase in import duty on gold has also led to a decline in gold imports but a surge in smuggling. To address this, Customs field formations and Directorate of Revenue Intelligence (DRI) have taken operational measures such as passenger profiling and risk-based targeting of cargo consignments to deter smuggling.
Insight:
The increase in gold smuggling cases in India reflects the interconnected relationship between economic factors, government policies, and criminal activities. It also sheds light on the adaptability of smugglers, who have developed new methods, such as smuggling gold in the form of paste, to evade detection. The shift in the geographical distribution of smuggling activities from Kerala to Maharashtra raises questions about the changing dynamics of illegal gold trade within the country. Additionally, the surge in smuggling cases poses challenges for law enforcement agencies and calls for the implementation of more effective strategies to combat this illicit trade.
