India tightens checks to curb gold smuggling
India has started to make physical checks of gold stocks held by wholesalers to ensure inventories match the amount imported by banks and state-run traders, an industry association said, as the country steps up efforts to halt smuggling.business Updated: Mar 03, 2014 23:40 IST
India has started to make physical checks of gold stocks held by wholesalers to ensure inventories match the amount imported by banks and state-run traders, an industry association said, as the country steps up efforts to halt smuggling.
The move could aggravate shortages in the physical market as authorities seize gold without a valid provenance, boosting premiums, which rallied to a record of $160 an ounce on London prices late last year.
"Government agencies are raiding and seizing gold at various places and asking to reconcile the (gold bar) number with the imported gold," said India Bullion and Jewellers Association (IBJA) general secretary Surendra Mehta.
Gold was being seized if numbers do not match up, said Mehta, whose 1,200 bullion dealers and jewellery retailers plan plan to close their shops on March 10 in protest at the spot checks and import curbs.
Officials from India's customs department were not immediately available to comment.
To tackle a widening trade deficit, India — the world's second-biggest gold consumer behind China — has put in place measures to dissuade gold buying, including a 10% import tax.
The bulk of official imports are channelled through either state-owned or private foreign banks and government-backed trading companies, which in turn sell the metal to local jewellery makers.
Mehta said legally imported gold bought by retailers from middlemen was being caught up in the checks.
"My 125 kg of gold has been stuck at Ahmedabad airport unnecessarily for a month now," Prithviraj Kothari, owner of Riddhisiddhi Bullions Ltd, a leading jeweller, told Reuters.
Customs officials have said only a fraction of illegal shipments have come to light.