 "A saleswoman shows a gold earring to customers at a jewellery showroom in Mumbai. Photo: Reuters")
Though 'unofficial import' of gold fell in 2015, smugglers have turned innovative and margin-savvy, says 'Gold Survey 2016' issued on Thursday by GFMS Thomson Reuters. It says unofficial import of 22-carat and 24-carat jewellery is increasing. And, an allied industry has emerged that manufactures electronic gadgets customised to conceal gold biscuits of 10-100g.
Innovative methods and import of jewellery evading customs duty increases margins. And, channels in the hawala (informal transfer) market have moved to currencies other than the dollar, helping reduce the premiums.
GFMS said unofficial import in 2014 was 187 tonnes; in 2015, it fell almost 25 per cent to 142 tonnes. The report also noted an increase by way of importing gold legally without paying duty, with the objective of exporting it and later diverting the same to the domestic market under the disguise of work in progress. This means gold diverted for value addition will come back to export units and be formally exported later, which in real terms never happens. What is interesting is how the cost of smuggling was cut. This was necessitated after removal of import restrictions, which reduced premiums for physical delivery and, hence, reduced smugglers' margins. GFMS' survey says in 2014, the hawala rate, at which foreign currencies were bought to pay for unofficially imported gold, rose as much as 4.5 per cent.
For, dollars were usually bought in hawals and gold smugglers were paid. In 2015, many dealers shifted from dealing in country currencies from where such unofficially imported gold was to be sourced and hence the hawala rate came down.
This has also led to flourishing of unregistered money transfer agents, popular among the Indian diaspora who were sending money home. And, their cost has also came down, says the report. “The syndicates involved in gold smuggling are believed to work in diversified businesses, which include gold smuggling and heroin smuggling, thus helping to build a wider but closed network of agents and carriers.”
About gold smuggling in different forms, it said 10-tola bars (nearly 100g) were not as popular as in 2014 but high volumes of 22-24 carat jewellery, other than refined bars, were routed through the Bangladesh, Nepal and Myanmar borders.
