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Back to the Past – Crazy harebrained 10% Import Duty on Gold leads to increase in Smuggling and Crime in India

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Gold Smuggling in India

India’s mafia has its roots in gold smuggling since the 1970’s and 1980’s, when high import duties on all goods made it lucrative to
smuggle gold. India got some sense back by dismantling the crazy import regime, where duties were as high as 250% leading to a surge in economic growth post 1991. Subsequently India has lowered custom and excise duties at par with the rest of the world, leading to an increase in trade flows and prosperity. But in the last 5 years, unprecedented amount of corruption and mishandling of the economy has led to GDP growth falling to 4%. India also suffered from a mini currency crisis as the massive current account deficit led to the rupee falling by almost 20% in a couple of months. The appointment of Yellen has been godsend for India’s leaders and allowed them to continue their crazy policies. The government put a 10% import duty on gold, leading to the growth of an old crime industry. Smuggling gold through porous borders protected by corrupt custom officers is a an easy thing. India consumes almost 1000 tons of gold every year which means gargantuan profits for organized smugglers.

India is seeing an exponential increase in case of gold smuggling with almost every Dubai and Thailand flight to India seeing gold smugglers. Smuggling 2 pounds of gold can easily lead to a payday of $5000, which is great considering India’s per capital income of $1000. Expect this gold smuggling to continue unabated till some sane person returns to the scene. India’s leaders are top economists with degrees of some of the best institutions. But their hare brained management of the economy shows the academic degrees count for little these days. Corruption, indifference and incompetence has reached new heights in India’s polity leading to a dramatic decrease in growth expectations and living standards.

Read on GWI The Indian Gold Habit – Reason, Problem & Solution.

Here are some links on gold smuggling . You find a newspaper report almost every day about a gold smuggler being caught. While India’s official CAD has reduced, I think that the unofficial one still remains high. Expect the rupee to remain strained until some sane government comes in.


A report by the World Gold Council notes that though the overall demand for the metal in India declined in the third quarter of this year, “gold entering India unofficially through its porous borders helped to meet pent-up demand”. Cautioning on this, WGC Managing Director (India) Somasundaram P R said: “Gold imports were only 85 tonnes in the third quarter against the demand of 148.2 tonnes for the same period last year … If this supply restrictions continue, the demand in the fourth quarter will be met through unofficial channel which has grown significantly.” “Supply constraints and high inflation resulted in decline in gold demand by 32 per cent to 148.2 tonnes in third quarter of this year as compared to 219.1 tonnes in the same period last year,” Somasundaram said on Thursday, the day WGC released its report.


As the 10% import duty on gold spurs unprecedented smuggling and authorities crack the whip, smugglers are skipping the traditional airport route and tapping into fake currency networks across the Indo-Bangladesh and Indo-Nepal border to push in the yellow metal. Sources said gold was bought in places like Dubai and Thailand and flown to Dhaka or Kathmandu where authorities are not as vigilant . The consignment is then brought to the border and stored in safe houses. “From here, human couriers are hired and given one or two bars to take across the border. These couriers make two to five trips a day,” the officer said.


In the first, on October 7, investigators found a huge stash of gold biscuits weighing 32 kg and worth close to Rs 9.5 crore hidden in a toilet abutting the cockpit, when an Air India flight from Dubai touched down in Chennai. In another bust three days later, DRI officials arrested an Air India Express flight attendant at Calicut airport on Sunday and seized gold bars worth Rs 1.84 crore from her.

A senior official at Air India office in Mumbai confirmed that they had recently received the letter from the DRI, which gave the carrier five weeks to submit information on employees involved in any way in the two flights.

“The letter points to the possible involvement of insiders [staff] in gold smuggling,” the official said. “We have already suspended the flight attendant who was caught with gold bars at the Calicut airport on Sunday.”


Sharjah Police busted an Indian gold smuggling racket, by foiling an attempt by two men to take gold bars worth Dh300,000 outside the country via Sharjah International Airport. They confessed that they were carrying the metal for a gold shop owner in India, who pays them handsome cash upon delivery. The suspects also told investigating officials that they have successfully smuggled out gold from another airport without being caught on earlier occasions.

Gulf News

A series of reports of gold smuggling into India, mainly carried out by rackets operated by Keralites, has one common feature: A good number of the carriers of smuggled gold into India are women from northern Kerala. In one case, a Keralite woman and her two daughters are suspected to be part of a smuggling ring.Over half a dozen women have already been caught smuggling gold into the country, including an air hostess and a former assistant manager of a bank. Police suspect that more and more women are taking the plunge into the smuggling business for to make quick money.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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