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India has never before intercepted so much smuggled gold as in the past financial year, according to the Times of India. For the first time in history, the total came to more than 10 billion Indian rupees, which is equivalent to more than 3,500 kilograms of gold. That is ten times as much as the 350 kilos of gold that Indian customs managed to intercept two years ago.
The explosive increase in the amount of smuggled gold is the result of the high import duty on the precious metal. Over the course of two years, this tax was gradually increased to 10% of the value of gold. At the current gold rate, this is easily a few thousand dollars, which made the smuggling of gold increasingly interesting.
The gold smuggling is very large when you consider that only a small part is intercepted. Suppose that only 10% of all smuggled gold is discovered by customs, then it means that 35 tons of gold enter the country 'illegally' on an annual basis. That is already almost five percent of the total amount of gold that India imports through official channels every year.
Nepal plays an important role in Indian gold smuggling. Gold from Dubai, Thailand and China enters the country in large quantities via the border with Nepal, a border that is difficult to guard due to the inhospitable landscape.
Coordinated shipments of gold are probably being carried out from Nepal, because since the severe earthquake in that country, the amount of gold intercepted from Nepal has decreased sharply. The earthquake killed a leader in gold smuggling, causing the organization behind many gold shipments to disappear.
"The deceased was a key leader behind the coordinated illicit trade from different countries. Just before the earthquake, we managed to intercept 40 kilos of gold that came from Nepal. Since then, almost nothing has been intercepted," a spokesman for the Indian intelligence service said. He added that a replacement for the late leader would probably emerge, as long as the import duty on gold remains so high.
Gold smugglers use creative methods to deceive the authorities. For example, customs has already intercepted gold that was incorporated into the shell of batteries. A batch of capacitors filled with the precious metal was also intercepted. Recently, 60 kilograms of gold were intercepted that had been processed in a batch of immersion blenders.
As long as the import levy on gold remains high, gold smuggling will remain profitable. Last year, according to the Figures Thomson Reuters GFMS is the second largest gold market in the world with a total physical demand of 852 tonnes, equivalent to 23% of global gold demand.
India managed to intercept a record amount of gold last year
