High import duty, resumption of flights lead to rise in gold smuggling

The smuggling syndicates have now resorted to body concealment of gold, wherein they turn gold dust into a paste by mixing it with castor oil, which is not detected by metal detectors.

In the backdrop of gold imports falling by over 24 percent in FY23 and the current duty at 18 percent, smuggling of the yellow metal continues to rise, with a five-fold increase in international flights, officials said.

Government agencies have detected numerous cases of attempts being made to smuggle in gold and silver. Between April 2022 and February 2023, 3,992 kg of smuggled gold was seized as compared to 2,172 kg in 2021-22. In 2019-20, a year earlier, 1,944 kg of gold was seized, according to government data.

The gold seizures indicate smuggling has even exceeded pre-Covid levels. In 2019-20, gold smuggling seizures were at 3,626 kg.

“Gold smuggling has increased tremendously. In FY23 itself, at Mumbai customs we have seized 600 kg of gold. Pre-covid, this number was not as much,” Manish Mani Tiwari, Commissioner of Customs at Mumbai airport told Moneycontrol. “There are various reasons. The number of incoming flights in Mumbai in FY23 were 33,000, while departing flights were 31,000. During Covid in 2020-21, the outgoing and incoming flights were 6,000. There has been a five-fold increase in the number of flights. The number of passengers has also increased tremendously.”

Gold interception has been high at Mumbai with 84 kg seized in 2021-22 and 99 kg in 2020-21.

“If the differential rate of gold in India and other countries is high then due to monetary considerations smuggling becomes lucrative. If the differential rate is Rs 6-7 lakh per kg of gold, then smuggling is high. In India, currently, the gold rate is Rs 58 lakh per kg approximately, which results in a differential. High import duty on gold at 18 percent offsets the price differential advantage,” a source told Moneycontrol.

A cat and mouse game

Smugglers of gold and silver adopt various methods, including body concealment. In order to deter smuggling of gold and silver, Customs field formations and the Directorate of Revenue Intelligence (DRI) keep a constant vigil and take operational measures such as passenger profiling with the aid of the Advance Passenger Information System (APIS), Risk-based interdiction and targeting of cargo consignments, non-intrusive inspection, rummaging of aircraft, and coordination with other agencies. On detection of attempted smuggling, action is taken in accordance with law, including seizure and confiscation of the smuggled gold/ silver.

“Mumbai airport customs has targeted the Sudanese syndicate to prevent gold smuggling. Look out circulars, especially anticipatory LOCs, have helped in large seizures of the yellow metal. The modus operandi was that they come in groups of 20-25 and the gold is carried by one. Gold carriers were also shifted to Indian passengers or lady passengers. Once caught smuggling, the data is shared with immigration, and the passport office and they are blacklisted. Gold smuggling has also been found to shift to minor airports such as Pune, Ahmedabad, Jaipur, and Patna,” Tiwari said.

A large share of the gold smuggling is from the African countries, including Sudan. Other minor airports where smuggling has been detected include Agartala, Bengaluru, Calicut, Lucknow, Chandigarh, Chennai, Cochin, Coimbatore, Goa, Varanasi, Madurai, Kolkata, Hyderabad, Amritsar, Trichy, and Thiruvananthapuram. The shift of smuggled gold to minor airports is a natural phenomenon and has been there for some time.

The smuggling syndicates have now resorted to body concealment of gold, wherein they turn gold dust into a paste by mixing it with castor oil, which is not detected by metal detectors.

Mumbai airport is in the process of procuring a millimeter wave scanner — expected by June 2023 — to detect on-body concealment, sources said.

Silver and drugs

Seizures of smuggled silver between April 2022 and February 2023 stood at 447 kg as compared to 5,194 kg in 2021-22, 714 kg in 2020-21, and 1,276 kg in 2019-20.

Besides gold, drug seizures are also in focus. In 2021, 7,197 kg of heroin was seized as compared to 3,628 kg from January to November 2022. In addition, 364 kg of cocaine was seized in 2021 as compared to 145 kg between January and November 2022.

“In FY23, 24 kg of heroin and cocaine was seized in Mumbai alone,” Tiwari said.