Finance Minister of India has recently urged officials to investigate a possible link between higher gold imports and smuggling. Concerns have arisen regarding an emerging pattern as the rise in gold imports typically corresponds with an increase in smuggling incidents.
Gold Smuggling into India
Statistics from the Directorate of Revenue Intelligence’s (DRI) Smuggling in India Report 2021-22 indicate that a total of 833 kg of smuggled gold, estimated to be worth around Rs 500 crore, was seized during the fiscal year 2021-22. However, this shows a decline from the previous year, largely due to cancelled flights amid the Covid-19 pandemic which halted smuggling from the Gulf region.
Over a span of five years ending August 2020, more than 11 tonnes of gold have been confiscated in 16,555 smuggling cases at various Indian airports. Although these figures only represent the gold that was successfully seized, it’s estimated that the actual amount of smuggled gold is significantly higher.
The World Gold Council (WGC) predicts that smuggling might increase by 33% to reach 160 tonnes in 2022, a rise attributed to an import duty increase on gold from 7.5% to 12.5%. Over the past decade, Maharashtra, Tamil Nadu, and Kerala have been reported as the leading regions for gold smuggling in India.
North East Smuggling Route
Approximately 73% of the confiscated gold was reported to have been brought into India through Myanmar and Bangladesh based on DRI reports. More specifically, 37% of the seized gold in FY22 originated from Myanmar and 20% from West Asia.
International reports suggest that smuggled gold often enters Myanmar from China through the towns of Ruili and Muse located on the respective sides of the China-Myanmar border. Consequently, the North-East route has become a popular smuggling channel.
Gold Imports into India
Meanwhile, India’s official gold imports have also seen an increase, leading to a major outflow of foreign exchange. Rs 3.44 lakh crore’s worth of gold was imported in 2021-22, which is a significant increase from Rs 2.54 lakh crore in 2020-21.
India, being the world’s second-largest gold consumer after China, imports approximately 900 tonnes of gold per year. As per the World Gold Council, consumption in India amounted to 797.3 tonnes in 2021, marking an all-time high for the last five years.
Gold imported into India includes both dore bar and refined gold, with dore bars accounting for 30% of India’s total official gold imports in the last five years.
About the Directorate of Revenue Intelligence
The Directorate of Revenue Intelligence (DRI) operates as India’s primary anti-smuggling intelligence, investigations, and operations agency and is governed by the Central Board of Indirect Taxes and Customs (CBIC), Ministry of Finance.
Headed by a Director General, the DRI not only works towards preventing smuggling of items like firearms, gold, narcotics, fake Indian currency notes, antiques, wildlife, and environmental products but also aims to inhibit the spread of black money, commercial frauds, and trade-based money laundering. The agency is based in New Delhi.
