By an estimate of precious metals agency GFMS, 154 tonnes of gold entered the country through unofficial channels in 2018.
Chennai: Smuggling of gold remained rampant in 2018, with the quantum of yellow metal that sneaked into the country through grey markets increasing by 15 per cent to 154 tonnes.
By an estimate of precious metals agency GFMS, 154 tonnes of gold entered the country through unofficial channels in 2018, up from 134 tonnes in 2017. This gold largely entered through eastern, north-eastern and western regions of the country and was sold through small-to-medium sized jewellers.
Anecdotal evidence also showed that some gold entered from Singapore, where gold having purity of 24-carat gets melted into rough chains weighing up to 200 grams. This is then smuggled into India. This gold is then converted into small bars and sold to jewellers.
"During our extensive field research across the country, we found that tracking down the unofficial supply of gold was a significant challenge, with the problem most rife in small to medium cities where the market is relatively minor and competition is high," said Debajit Saha, Senior Analyst, Precious Metals Demand, South Asia and UAE, GFMS.
The tax component of 10 per cent import duty and 3 per cent GST, which makes Indian gold costlier than many other countries in the region, is the main trigger for the increase in smuggling activities. Many customers do not mind paying the import duty component as it is part of the domestic price. But customers are not ready to pay three per cent GST as it is not part of the price. Payment of GST also makes the transaction accounted. In order to remain competitive in the market, retailers give up to a 3 per cent discount on total sale values of jewellery.
According to GFMS, weak cash circulation and high prices are some of the key concerns of those who are engaged in selling jewellery originating from smuggled gold.