Legal gold imports and smuggling on the rise, says DRI

MUMBAI (Scrap Monster): The official data published by the Directorate of Revenue Intelligence (DRI) indicates that legal imports of gold into the country have increased considerably despite high import duty on gold imports. At the same time, there has been no end to entry of gold through illegal routes.

Nearly 161 kilograms of such gold were seized during the past four days alone. According to DRI officials, 88 kilograms of gold smuggled into the country from Myanmar were seized at Silguri. In another incident, a consignment from Dubai containing 57 kilograms of gold was seized at Delhi Airport. Also, a consignment of 7 kilograms of gold from Sri Lanka smuggled through sea route was seized by officials on Sunday. The DRI officials also seized another consignment of 8 kilograms of gold that was smuggled from Sri Lanka to the South Indian state of Tamil Nadu via sea route.

Despite easing of import restrictions by the government, gold still continues to be an attractive bet for smugglers, mainly on account of the difference between international and domestic prices. India has a high gold import duty of 10% as compared with low import duty that exists in many of the neighboring countries.

DRI estimates that only nearly one-third of the smuggled gold are seized. Also, one fifth of legally imported gold is believed to flow into the country via unofficial channels. WGC estimates indicate that legal gold imports by India during 2014 stood at nearly 850 tonnes. This suggests that around 175 tonnes of gold was smuggled into the country during the year.

The official DRI data shows that the value of legal gold imports into the country during Feb ’15 surged nearly 48% to $ 1,981.53 million in comparison with $1,331.86 million during Feb ’14. The cumulative legal gold imports by the country during the initial two months of the year amounted to $3,539.92, nearly 28% higher when compared with the imports during the corresponding two-month period in 2014.