After banks stopped selling gold coins and import duty on it was recently hiked from 6 to 8%, there has been a spurt in demand for the metal in the illegal market.
In the last five days, the Customs department has seized gold worth Rs2 crore while it was being smuggled in the city, mostly from Dubai.
In a recent case, an Air Intelligence Unit (AIU) batch headed by the assistant commissioner of Customs Rishi Yadav arrested a 40-year-old woman from Somalia, while she was allegedly trying to smuggle 610 grams of gold worth Rs16.2 lakh, on arrival from Nairobi.
AIU officials stopped Lul Mohamud Hassan after she crossed the green channel at Chhatrapati Shivaji International Airport without declaring the gold that she had been concealing, said sources.
Sources in the department said the increase in import duty has made gold smuggling more lucrative. “Smugglers and buyers of smuggled gold not only save on duty but also on various others taxes like Value Added Tax, income tax, as the same is unaccounted for,” an official said requesting anonymity.
Market sources said now that banks have stopped selling gold coins, other sources are trying to pitch in to take advantage by selling gold through illegal means.
Kumar Jain, vice president of Mumbai Jewellers Association said that this coupled with the hike in import duty have increased smuggling activity.
A market source said that smuggling would gain momentum once the existing stock, which came before the hike in duty, ends. “Also, the banks have recently stopped selling gold, so the impact would increase in the coming days,” the source said.
The import duty was hiked on June 5 while the next day finance minister P Chidambarm had advised banks not to sell gold coins. This was to curb import of yellow metal to stop the account deficit from worsening.
Customs officials said that most of the smuggling is done from Dubai, as it is a favoured destination for gold smugglers because yellow metal costs Rs1 lakh per kg less than compared to Mumbai.