About 50 tonne gold has been smuggled into the country in the past 10 days, and subsequently pushed into the market to cater to a surge in demand for the precious metal in the festive season. There is a heavy demand for gold during Dussehra, for which booking and supply will start from Thursday, when shradh ends and Navratri starts.
Market sources said that 30% of the smuggled gold has been supplied in Mumbai to unscrupulous jewellers, while the rest was distributed to different parts of the country.
Sources said that illegal gold is finding a place in the market because of below average import resulting from the 80:20 scheme and 10% import duty. Against the average monthly demand of 80 tonne, the import is presently around 51 tonne in the country.
Sources said that gold was smuggled into the country through the land route, via Nepal, Bhutan, Bangladesh and Pakistan. “This is because airports have tightened security, restricting the smuggling of gold by the air route,” said a market expert. The Mumbai airport customs, which has started a serious crackdown on gold smugglers, has seized around 529 kg gold from April to August this financial year.
Experts fear that more gold will be smuggled from similar land routes in days to come, as the demand will shoot up once the marriage season begins, in the later part of November. “There will be huge demand because of the festive season, and also the low price at which gold is presently being traded,” said Kumar Jain, vice-president of Mumbai Jewellers’ Association.
Jain said, “The government should immediately bring down the import duty and relax the 80:20 scheme, so that official import goes up. That will bring down the smuggling.”
Rajiv Popley, director Popley Group, said, “Smuggling of gold has been on the rise for the last eight months, due to irrational supply issues. The officially available gold was at a premium, which was higher than anywhere else in the world.”
Popley said that the demand for gold is increasing with the onset of festivities. “Both Dussehra and Diwali are auspicious festivities to invest in gold,” he said.
What is the 80:20 scheme
* The Reserve Bank of India made it mandatory, in July 2013, for each importer to export 20% of gold that was imported into the country
* According to these norms, importers could bring more gold into the country only after this 20% was released to exporters
* The RBI move was an attempt to restrict gold imports, which were thought to be the biggest contributor to the widening current account deficit
960 tonne - average annual import in good market conditions
Import in 2014-2015 (April to August) – 257 tonne
Import in 2013-2014 – 563.4 tonne
Import in 2012-2013 – 845 tonne
80 tonne - average monthly import in good market conditions
51 tonne - average monthly import at present
Rise in import duty:
* Raised to 2% from the earlier Rs300 for 10 grams in January 2012
* Raised from 2% to 4% in March 2012
* Raised from 6% to 8% in June 2013
* Raised from 8% to 10% in August 2013
Seizure by Mumbai airport customs:
April to July 2014 – 403.5kg
April to July 2013 – 61.46kg
Recent gold price:
September 22 – Rs26,400
September 20 – Rs26,500
September 19 – Rs26,525
September 18 – Rs26,575
September 17 – Rs26,850
September 16 – Rs26,965
September 15 – Rs26,990
Recent big seizures in Mumbai (2014)
* August 30: The Air Intelligence Unit (AIU) of Mumbai Customs seized 12.5 kg gold worth Rs3.2 crore at the Mumbai international airport, in two separate seizures. The gold was being smuggled from Hong Kong and Dubai.
* August 9: The AIU seized 10.8 kg gold hidden in packets in the form of a garland, worth Rs2.3 crore, at domestic airport. In two other cases, Customs seized 3.9kg gold worth more than Rs1 crore.
* May 11: In the biggest single-day seizure of gold at the city airport, the AIU seized 25.5 kg gold valued at Rs6.5 crore from two passengers from Dubai. The duo arrived in different flights, but belonged to the same cartel. Both of them tried to pass off as loaders working at the airport, by hanging identity cards around their neck, which were actually driving licenses.
* April 11 - Customs seized 9kg gold worth Rs2.3 crore being smuggled into the city from Dubai. The passenger had tied 9 gold bars, each weighing one kg, on the upper half of his body.