Smuggled gold in flower pots

In Dubai's southern Indian state of Kerala, a 27-year-old welder was arrested last month after customs discovered gold in the lining of his copper flower pot. The welder received 30,000 rupees from an importer to smuggle a kilogram of gold into the country and thus evade the 10% customs tax. Such stories have become commonplace in India, where the government tripled the tax on gold last year. As a result, illegal imports doubled to about 200 tons, the World Gold Council estimates.

The demand for gold continues in India, where gold is widely used as a gift at parties and weddings. In addition, the residents have no social security other than gold, according to Haresh Soni, chairman of the Indian Gems & Jewellery Trade Federation. Consumption will not decrease.

Gold smuggling has a long history in India. With a ban on the official import of gold for domestic use until 1990, demand was met by illegal supplies. In the period 1968 - 1995, illegal imports ranged from 10 tonnes to 217 tonnes per year. Also in the Bollywood movies in the 1970s, smugglers were usual villains.

Source: Bloomberg