The recent series of actions by the Indian government along with tax hikes on bullion imports have created an acute shortage for gold in domestic markets. Estimates released by the country’s Finance Ministry have signaled an alarming rise in illegal gold imports to the country.
The Bombay Bullion Association has stated that the tighter import curbs by the government have resulted in a huge gap between supply and demand for the precious metal. This huge gap is being partly filled by the illegal traffickers who buy the gold overseas at a cheaper rate and sells it to domestic jewelers or bullion agents by evading tax.
Revenue authorities seized gold worth Rs 598 million during April-June quarter this fiscal, an increase of nearly 365% in comparison with the same quarter last year. Much more alarming is the fact that only roughly 5% to 10% of the smuggled gold is caught by authorities. The recent data released by the Department of Revenue Intelligence indicates that occurrences of gold smuggling are mounting. Smuggled gold pours into the country mainly from Dubai, Bangkok and Singapore. Increased number of incidents was reported on smuggling across land borders with Nepal and Bangladesh during the quarter.
The country’s Finance Ministry has asked the airport customs officials to beef up the security at airports. However, the customs officials have sought more powers and stricter punishment for offenders to rein in gold trafficking, which has overtaken narcotics as the highest valued smuggled item.