India's Gold Smugglers Use Bizarre Methods to Beat Customs Restrictions

There has been an increase in the number of travellers from major gold trading hubs such as Dubai or Singapore attempting to smuggle the precious metal back into India, where it costs about 20% more.

Since last year's import restrictions the number of smugglers has increased, as has the range of ingenious and bizarre methods being used to sneak gold into India, the world's second-largest bullion consumer, according to a Bloomberg report.

Returning home to the southern Kerala state from Dubai, a 27-year-old welder was arrested after customs agents discovered gold in the lining of his brass flower pot.

An importer allegedly offered the welder 30,000 rupees ($491) to carry one kilogram of bullion worth about $50,000. The importer wanted to avoid paying the 10% customs tax.

Smugglers have tried to hide gold inside trolley wheels, disguise it as beading on handbags, stash it in body cavities, or in mobile phones, said K N Raghavan, commissioner at the Customs House Cochin in Kochi.

About 24 kilograms of bars were found in the toilet of an aircraft in Kolkata some two months ago, said Gaurav Sinha, additional customs commissioner. Most of those arrested for smuggling are carriers who have no stake in the consignment, Sinha told Bloomberg.

Since import restrictions were imposed last year, the biggest gold bust at Cochin International Airport occurred in September 2013. Two women wearing burqas, the full-length body garments worn by some Muslim women, were found to be carrying 20 kilograms of gold, said Raghavan.

"We used to see sporadic instances of smuggling in the last 10 years," said Raghavan.

"Since August [2013], the frequency of such incidences jumped. Carriers used to hail from the poorer socio-economic strata. Now we're seeing people who are respectably employed, smuggling in gold as margins are good," he told the news agency.

Government Raids

Earlier in the month, Indian authorities started making physical checks of gold stocks held by wholesalers, to ensure inventories tally with the amount imported through legal channels, an industry association said.

The checks were part of efforts aimed at curbing gold smuggling.

Pakistan Bans Imports

Earlier this year, Pakistan temporarily prohibited gold imports in a bid to check smuggling into neighbouring India.

Islamabad said on 21 January the ban would last for 30 days and that exports, mostly jewellery, would not be restricted. Pakistan last banned gold imports for a month in August 2013 after the country purchased gold worth $514m (£313m, €380m) in the preceding month.

Indian Import Curbs

To tackle a widening trade deficit, Asia's third-largest economy rolled out measures to discourage gold buying, moves that have flooded the market with smuggled gold.

Three upward revisions to the import duties on gold in 2013, to a record 10%, and restrictions tying purchases to exports, have resulted in an almost 60% drop in shipments in the six months to December 2013.

While official imports in 2013 were pegged at 750 tonnes, an additional 200 tonnes was believed to have been smuggled into the country, the World Gold Council has estimated.