Page 37 - DRI ANNUAL REPORT EBOOK

In FY 2019-20, 120 tonnes of gold were smuggled into India, which was about 15% to 17% of the nation’s annual demand, according to the World Gold Council.
The economic reforms of 1990s witnessed the repeal of the Gold (Control) Act, 1968 that had prohibited the import of gold except for jewellery. The erstwhile statute had led to the emergence of a notorious network of gold smugglers during 1970s and 1980s. The economic reforms and liberalisation led to the imposition of a modest specific duty of Rs 300 on 10 grams in 2011-12 (increased from Rs 200 in 2010- 11) on the imported yellow metal, bringing gold smuggling almost to a grinding halt.
The duty rate was enhanced in 2013, essentially to rein in the spiralling current account deficits, when the rate was shifted from specific to ad valorem and within a span of two months, the duty on gold increased nearly four-fold to 4 per cent. At present, the import of gold attracts Customs duty of 12.5 per cent, GST of 3 per cent and an additional GST of 5 per cent on making of gold ornaments. Needless to say, the increase in the incidence of duty on the imported gold, has incentivised the smuggling of the yellow metal.
Some estimates suggest that there is an illicit margin in excess of Rs 3 lakh per kg of smuggled gold. With the price of gold going past the mark Rs 50,000 for 10 grams, the illicit trade has become all the more profitable.
Chart depicting gold seizure by Indian Customs in terms of value and quantity from 2015-16 to 2018-19
According to the study conducted by IMPACT, most of the gold enters India through the UAE, which accounts for 75 per cent of all the entries. The UAE, in turn, is the most favoured destination for
the illicit ASGM (Artisanal and Small-scale Gold Mining) gold coming from the conflict- prone Great Lake Region (ICGLR countries) of east and central Africa.
SMUGGLING IN INDIA REPORT 2019-20 3
GOLD