Spurt in gold smuggling in Kerala, industry blames policy

Kerala has been witnessing a spurt in smuggling of gold through its airports this year as the yellow metal has become even more lucrative for smugglers following a 10 per cent hike in its import duty.

PTI| Last Updated: Nov 24, 2013, 15:43 PM IST

Thiruvananthapuram: Kerala has been witnessing a spurt in smuggling of gold through its airports this year as the yellow metal has become even more lucrative for smugglers following a 10 per cent hike in its import duty.
In the last eight months alone, nearly 90 to 100 kg of gold has been seized by customs officials from passengers who arrived in Thiruvananthapuram, Kochi and Kozhikode airports.

According to Customs sources, the gold in different shapes, including molten form, were mostly seized from passengers who arrived from Dubai.

"Gold has become lucrative and a potential contraband for smugglers with hike in duty and restrictions on import," Customs Commissioner, Kochi, K N Raghavan told.

He said vigil in all airports in the state had been stepped up and seizure of gold gone up in recent months.

The government had raised the import duty on gold thrice this year with the rate pegged at 10 per cent in the last revision in August as part of its efforts to curb the surging imports and burgeoning Current Account Deficit.

Dubai, a major global gold trading centre, is the main source of gold being smuggled into India. Low prices, lack of any restrictions on gold purchase and easy air connectivity to Indian destinations made Dubai the favoured city for smugglers to source the precious metal.

According to B Girirajan, President of All Kerala Gold and Silver Merchants Association, fall in availability of gold following restrictions imposed by the Centre is the prime reason for the increase in smuggling.

However, all the gold being smuggled into the country was not going into the jewellery industry but being diverted to other sectors like film industry or go into the hawala route, he told.

He said jewellery business in the state had witnessed a drop of 40 to 50 per cent since July last."One of the reasons for this is the impact of new gold policy. But we are yet to ascertain fully if there are other factors like inflation."

Gold smuggling has become attractive as the profit margin is very high as the carriers are paid Rs one lakh for every kg of the precious metal being brought in.

The smugglers could easily gain a profit of Rs four lakh per kg if they manage to get the metal safely out and route it to market, he said.

Customs have strengthened vigil in airports by reinforcing its intelligence wing and upgrading scanning technologies, Raghavan said.

As part of this a state-of-the art passenger scanning machine had been installed at the Kochi international airport, he added.

With the tightening of surveillance, smugglers have also hit upon new modus operandi and communication methods with their contacts and conduits.

Last week, a passenger was arrested in Kozhikode airport with gold melted in acid and spirit. There were also cases of gold being brought concealed in cycle parts and mobile phone cases.

Employing women carriers is another method and an off-duty air-hostess along with her friend was arrested this month in Kozhikode after Directorate of Revenue Intelligence officials found six gold bars kept hidden under her belt.

Significantly, alleged links of some customs officials in the gold smuggling came to fore in the recent prominent case of seizure of 20 kg of the precious metal at Kochi.

CBI arrested three Customs officials, including a Deputy Commissioner, on the charge of helping the smugglers.

Seizure of gold from the Air India air-hostess and her friend showed even airline staff was involved in smuggling.

The two women, who were caught on arrival at the Kozhikode airport on November 8, were suspected to have frequently smuggled gold from Dubai for kingpins of the smuggling racket.

According to Girirajan, what has been seized at the airport was only a small quantity of actual amount of gold being smuggled into the country.

Elaborating on the dip in jewellery sales, he said the sector used to clock Rs 10,000 crore business a year and the current trend was going to have a serious effect on the revenue of the government as sales tax from the sector used to be a major source for the state exchequer.

Out of the total gold seized in recent months, nearly 60 kg was recovered in Kozhikode airport followed by 35 kg in Kochi, sources added.