No relaxation of import duty curbs encourages increase in smuggling
Gold demand in India is expected to be robust in 2014 and likely to encourage an increase in smuggling if curbs on bullion imports remains, the World Gold Council (WGC) said. In fact, increase in gold smuggling can be attributed to fluctuation of price of yellow metal and customs duty rate. The smuggled doubled in 2013 due to import restrictions put in place to contain the current account gap.
According to estimates by the global precious metals consultancy GFMS, 150 to 200 tonnes were smuggled in 2013 from Dubai, Singapore and land routes of Bangladesh, Pakistan and Nepal. The agency estimated 112 tonnes had been smuggled in 2012.
After the restrictions through the increase in duty to 10 per cent and the introduction of the 80:20 (20 per cent of imports to be supplied to jewellery exporters and no supply if remittances of the previous two export bills are pending) formula last year, the grey market has become active. The World Gold Council (WGC) estimates smuggling at 150 tonnes.