Ten Afghan nationals, including nine women, were arrested at New Delhi’s Indira Gandhi International (IGI) airport on the night of March 18, as they allegedly tried to smuggle in 38 kilograms of gold worth $1 million (Rs 100 million). 

The arrests – the first time officials uncovered large-scale involvement of Afghan nationals – reveal the new heights to which gold smuggling has reached in India with the government curbing imports of the precious metal into the country.

According to airport officials several cases of Afghan nationals trying to smuggle gold into the country have been reported in the last 15 days and meantime official data points to surging gold seizures. 

Right to information ple

Following a Right To Information (RTI) plea, gold smuggling at just one airport, the IGI airport, has been revealed to have shot up 26 times from previous years, with 177.6 kilogram of the precious metal intercepted at the airport in this financial year. The data was submitted to a petitioner who had asked for an RTI to showcase the high amount of smuggling.

Officials said nearly 85 kilogram of gold has been seized by the customs department since the beginning of 2014. Last year, only 6.8 kilograms of gold was seized by this time – the first three months.

In the case of the Afghan nationals, police said the group from Herat, Afghanistan, was stopped for a customs check. Some of the women were wearing up to 8 kilograms of ornaments, while others had about 5 kilograms of gold jewellery and accessories on them, said customs officials. 

Apart from this, a male passenger, who was also coming from Afghanistan, was arrested after he was found carrying gold bars. Though the limit for carrying gold was increased last year, it is only for Indian passengers who have stayed abroad for more than a year. 

Incidentally, with India’s economy showing signs of recovering, and a decline in consumer price inflation recorded, economists are predicting a change in the government’s strict stand with regards to imports. However, some skeptics and analysts have maintained that the reduction in the current account deficit is an exaggeration, because gold imports have actually been pushed underground by the import curbs imposed over the past year, and that any change in the import curbs would not stem smuggling. 

Surging seizures

Late last month, airport authorities at IGI airport nabbed two Sri Lankans who were trying to smuggle out 20 kilogram of gold. The two were travelling from Mumbai. Their baggage was x-rayed and two 10 kilogram gold bars were seized.

Officials said Pune is also considered to be one of the important transit points used by smugglers. In some of the cases of gold smuggling busted at the Pune International Airport, which is a four hour drive from Mumbai, investigation of the illegal `carriers’ revealed that they were about to deliver the gold to their counterparts based in Mumbai and in South India. 

Maulik Trivedi, a bullion retailer pointed out, put the scale of smuggling as it has grown with increased taxes ong gold in perspective. 

“In 2010-11, import duty on gold was $4.91 (Rs 300) per 10 grams and no case of smuggling was detected. In 2011-12, when import duty was hiked by two per cent, two kilogram of gold was immediately seized, giving an indication that the smuggler’s activities had started rising. In 2012-13, when the duty was hiked twice, 6.82 kilogram of gold was intercepted, while in 2013-14, when duty was hiked twice, smuggled gold recoveries jumped almost 26-fold,” he said, referring to official data.

At the Kerala airports in South India, a 400 percent jump in arrests has been reported with a 300 percent rise in the value seized. At the Mumbai airport 54 kilograms of gold seized in financial year 2011 has grown to 204 kilograms in financial year 2014, official data showed.

Moreover, there has been an increase in instances of bringing in a kilogram of gold too, since it is easy to carry and can be hidden. As compared to four kilograms brought in in fiscal year (FY) 2011, officials at the Mumbai airport seized 1,700 kilograms in FY2014. At Kochi too, as compared to the two kilograms of gold caught in FY2011, officials seized 250 kilogram in FY2014.

Traders have said that gold demand in India is expected to be robust in 2014, likely leading to a further jump in smuggling if the curbs on bullion imports remain.

Experts have also warned that the Indian government’s move to hike import duty on gold has done little to curb its demand and made it an even more sought after commodity in the near term, pushing up the price of the precious metal.