Saturday, December 28, 2013

Smugglers smile as NRI carriers bring gold into country legally

1000 gold 2CHENNAI: Faced with curbs on gold imports and crash in international prices leaving it cheaper in other countries, gold houses and smugglers are turning to NRIs (nonresident Indian) to bring in the yellow metal legally after paying duty. Any NRI, who has stayed abroad for more than six months, is allowed to bring in 1kg gold.

It was evident last week when almost every passenger on a flight from Dubai to Calicut was found carrying 1kg of gold, totalling up to 80kg (worth about Rs 24 crore).

At Chennai airport, 13 passengers brought the legally permitted quantity of gold in the past one week.

"It's not illegal. But the 80kg gold that landed in Calicut surprised us. We soon got information that two smugglers in Dubai and their links in Calicut were behind this operation, offering free tickets to several passengers," said an official. The passengers were mostly Indian labourers in Dubai, used as carriers by people who were otherwise looking at illegal means, he said. "We have started tracing the origin and route of gold after intelligence pointed to the role of smugglers," he said.

Reports from Kerala said passengers from Dubai have brought more than 1,000kg of gold in the last three weeks. People who pay a duty of Rs 2.7 lakh per kg in Dubai still stand to gain at least Rs 75,000 per kg, owing to the price difference in the two countries. Gold dealers in Kerala say most of this gold goes to jewellery makers in Tamil Nadu and Andhra Pradesh.

Revenue intelligence sources said it was but natural for operators in the Gulf to take advantage of the situation and approach potential carriers. "There is always a steady stream of Indian labourers from the Gulf visiting Kerala, and they form an attractive target for these dealers. Since there is no risk involved, and some incentives thrown in, many of them are eager to carry someone else's gold," said an official.

The World Gold Council notes that India is the world's biggest gold consumer with a 20% share of global demand. Within the country, south Indian states account for 60% of gold sales. "Import duty on gold in India has increased from 2% to 15% between January 2012 and September 2013. Moreover, the Reserve Bank of India in June ruled out any credit transaction for imports, unless they were intended to make jewellery for export. This has reduced import of gold, forcing gold merchants to depend on smuggled gold," said the official.

These government measures to control the current account deficit did not reduce the demand for gold in the market. "RBI tried to discourage gold purchases because it doesn't have the utility of other commodities like oil or copper. It mostly sits there in lockers. But when the gold imports through proper channels have come down, merchants have started depending on illegal channels to meet the demand from consumers," he said.

December 22, 2013 (Source: Times of India)

http://articles.timesofindia.indiatimes.com/2013-12-22/india/45473352_1_gold-imports-gold-merchants-gold-dealers


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