Surge in Gold Import Duty Revived Smuggling Trade in India

SEATTLE (Scrap Monster): The latest focus report on India’s bullion trade by the World Gold Council (WGC) states that import regulations on bullion have boosted unofficial gold flows in the country.

The report points out that smuggled gold reached the country, especially by sea from the western part of Asia and the CIS region during the period from 1960 and 1990, when the Gold Control Act was in force. After its abolition, these unofficial flows almost disappeared. It was in 2012, with the hike in import duty on gold, that the smuggling trade witnessed revival, the report said.

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There has been a notable change in dynamics of the unofficial trade over the past five years. Various policy measures including demonetization and introduction of GST regime resulted in a dip in unofficial flows from 119t in 2015 to 100t in 2018. The duty hike boosted unofficial bullion imports to 117t in 2019, which then fell drastically to 22.3t in 2020, impacted by Covid-19 pandemic.

The gold smuggling has shifted away from the sea during recent years. Nowadays, air and land routes have become channels of smuggling. As per recent estimates, 65-75% of smuggled gold into India comes by air, whereas 20-25% comes by sea and the remaining 5-10% by land routes.