Jewelry (and, to be sure, gold) demand is such an intrinsic part of Indian culture that it is not surprising that as official imports have slowed, smuggling has risen. Read the first part of this story here.
Official Indian gold imports may fall 70% in the final quarter of 2013 from 255 tons a year ago and are expected to be half the usual levels at 500-550 tons next year if the new import rules are maintained, a top trade body official said last week. Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation (GJF), is quoted by Reuters as saying Indians have depended heavily on old heirlooms and smuggled metal to meet wedding demand.
Although fourth-quarter demand is expected to be low because consumers brought forward wedding purchases to April and May, when gold prices fell drastically and imports surged, part of the demand is already being met by smuggled imports. Check out our gold outlook in The Monthly MMI® Report.
The World Gold Council estimates that 150 to 200 tons of smuggled gold will enter India in 2013, on top of the 900 tons of official demand, according to Reuters. Between April to September alone, India’s customs officials seized nearly double the amount of smuggled gold apprehended in all of 2012.
“Though the quantum of seizures has increased, in our opinion it reflects only 1 to 2% of total smuggling,” said a revenue intelligence officer in Mumbai as quoted in the article.
Now for Some Hilarious/Sad Stories Behind Smuggling:
In June, a passenger flying from Dubai was caught at New Delhi airport with about 755 grams (1.7 lbs) of solid gold staples painted grey. Officials stopped the man because the cardboard boxes he was carrying were stapled far more than seemed necessary. In several other cases, travelers have been caught with gold in their underwear. In late November, 56 Sri Lankans were held in Kochi after they were found with nearly 12 kg of gold. Some of them had travelled to Kochi six times last month.
So serious is the activity viewed by customs that they are treating it more harshly that drug dealing. Apparently Mumbai customs offers a reward of up to 50,000 Indian rupees ($800) per kg of bullion seized for informers in gold smuggling cases. Cocaine and heroin informers get only up to 40,000 rupees and 20,000 rupees respectively.
So if you are scheduled to fly into Delhi, Mumbai or indeed any of the principal Indian airports, make sure you walk with a spring in your step and don’t perspire too much, or security will have you strip-searched sooner than you can say “Welcome to India.”