Smuggling of gold has jumped manifold during fiscal 2013-14 due to the Government’s firm decision not to relax import curbs on the precious metal.

Data from the Directorate of Revenue Intelligence show that cases of gold smuggling, value of gold seized and number of arrests has increased 265 per cent, 442 per cent and 750 per cent, respectively, during 2013-14 compared to 2012-13.

Gold is being smuggled in not only via traditional sources such as West Asia but also from newer locations such as Bangladesh, Sri Lanka, Nepal and Myanmar.

Smuggling methods also saw lot of ‘innovations’ in the last fiscal. One such notable method was converting solid gold into powder, mixed with ‘mehandi.’ In Pune, gold was found in date fruit. The seed was removed gold was placed in its stead. In another case, a belt buckle made of gold was given a metallic finish.

Key contributor to CAD There are apprehensions that gold smuggling will continue till the 10-per cent import duty restriction and the 80:20 scheme are eased. These curbs were imposed to control the Current Account Deficit (difference in payment and receipt in foreign currency). Gold contributes to more than half this deficit. The deficit is expected to be between $33-35 billion as against $88 billion in 2012-13. Gold imports through the legal channel are estimated to be around $25 billion in the current fiscal from $53.8 billion in 2012-13.

Earlier this month, RBI Governor Raghuram Rajan did not rule out the possibility of taking smaller steps to remove some of these curbs. “The precise timing of these actions will have to be discussed with the government. It would be useful for some of the big uncertainties facing us to be behind us rather than still in front of us before major actions are taken in this regard,” Rajan had said.

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