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Gold smuggling arrests jump 750% YoY in India

With gold hauls at almost all international airports in India, the chorus to reduce import duty on gold gains momentum.

While cases of gold smuggling in India have jumped 265% from 40 in 2012-13 to 146 in 2013-14, the number of people arrested has shot up by 750%, from 30 in 2012-13 to 255 in 2013-14, data from the Directorate of Revenue Intelligence shows.

“Gold imports through the legal channel have come down considerably. The chorus to decrease import duty is gaining everyday, and the recent trade figures are indicative that things have slumped to a new low,” said Manish Kedia, bullion trader.

Data shows that gold smuggling cases at the Sardar Vallabhbhai Patel International Airport in Ahmedabad, have jumped 15 times in the last one year. Around 75% of the gold seized by customs officials at the airport in 2013-14 has been after August 2013, when the Indian government slapped 10% duty on gold imports.

See also: Pressure on India to cut gold duty mounts 

Elsewhere, the value of gold seized has jumped 442% in one year, from $7.4 million (Rs 448 million) to $40 million (Rs 2.4 billion), according to data from the Directorate of Revenue Intelligence, which has been tracking seizures across the country.

On April 10, 5 kilograms of gold was seized at the Chennai international airport, while a day earlier on April 9, customs officials had a rich haul of over 15.7 kilograms of gold at the Hyderabad airport, valued at more than $746,716 (Rs 45 million) from two lady passengers travelling from the Gulf. The instances keep on adding everyday.

Customs duty on gold, silver and platinum was hiked to 10% in August 2013, in a decision that was expected to rake in an additional $800 million (Rs 48.3 billion) to the central exchequer.

What it did bring in was a surge in smuggling activities, especially in Gujarat. Data shows that while 6.136 kilogram of gold was seized at the Ahmedabad airport in 2012-13, the quantity of gold seized in 2013-14 soared to 28.50 kilograms, an increase of four times.

In 2013-14, the department detected 30 cases of gold smuggling, while in 2012-13, only two cases of gold smuggling were recorded by the department. In the last three months alone, 18 kilograms of smuggled gold has been seized at the Ahmedabad airport.

Moreover, data shows that of the 28.50 kilograms of gold seized in 2013-14, 21.40 kilogram, which amounts to 75%, was seized between October 2013 and March 2014. The highest seizure of 13.10 kilogram was in February 2014, while in March 2014, 4.99 kilogram of gold was seized by the customs department in Ahmedabad, data shows.

Data released by the Gujarat State Export Corporation Limited too shows that 87 million tonnes of gold was imported into Gujarat in 2013-14, the lowest in the last six financial years.

That happens to be the situation in just one state.

However, it is an important state, for 8 out of 10 diamonds available on the global market are cut and polished in Surat, Gujarat. With India being the world’s leading diamond cutting and polishing centre, the diamond polishing and cutting industry in one state earns India several billion dollars in annual exports. The state is also turning out to be the mainstay for most gold smugglers to get ready buyers for their illegal wares.

Indeed, jewellery shops in Gujarat are doing roaring business. Huge quantities of gold smuggled into India are directed to the state to enable bullion traders to carry on their business and circumvent the negligible consignment of legal gold.

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