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    World’s biggest lockdown chokes Indian gold smuggling routes

    Synopsis

    Illegal shipments of gold to India are estimated to have slowed to a trickle of about 2 tons a month, and may total about 25 tons this year.

    Illegal shipments have been hit by one of the world’s strictest lockdowns, which was announced in March and halted international flights among other measures.
    By Swansy Afonso

    The coronavirus pandemic has crushed the inflow of gold smuggled into the world’s second-biggest consumer.
    Illegal shipments of gold to India are estimated to have slowed to a trickle of about 2 tons a month, and may total about 25 tons this year, according to N. Anantha Padmanaban, the chairman of the All India Gem and Jewellery Domestic Council. That compares with an estimate of as much as 120 tons last year, or about 17 per cent of the nation’s annual demand, according to the World Gold Council.

    Illegal shipments have been hit by one of the world’s strictest lockdowns, which was announced in March and halted international flights among other measures. It also resulted in the economy contracting by almost a quarter in the three months through June, slamming overall demand for gold. While restrictions are slowly easing, the country is yet to fully open up its borders as it’s rapidly becoming the global epicenter for virus infections, lagging behind only the U.S.

    “There were no flights in the last six months and so there has been a negligible amount of smuggling,” he said. “Whatever is being smuggled is coming from land borders with Nepal, Pakistan, Bangladesh and Sri Lanka and not much from airports.”

    goldBloomberg

    That’s pushed the monthly average of smuggled gold caught at Indian airports to a six-year low of 20.6 kilograms in the year started April, according to Bloomberg calculations based on finance ministry data.

    Smugglers of gold have benefited from record high prices and a 12.5 per cent import tax that India imposes on shipments of the metal and additional local taxes, making illegal purchases cheaper. Jewelers have been seeking a cut of at least 50 per cent in the import tax to reduce the inflows and legalize the imports.

    That will be key for India as once flights resume in full swing, smuggling may rise again. Removal of the import duty on gold by Sri Lanka this month may also increase smuggling into India, Padmanaban said.

    “A 45-minute boat ride from Sri Lanka can get you to India’s southern tip,” Padmanaban said. “They all switch their operations very quickly.”
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    9 Comments on this Story

    Ramaguru Prasad Jakkala31 days ago
    I don't agree, even in lockdown everyday atleast 1 kg of gold is being smuggled under the very nose of officials.
    Kali Prasad Chinam31 days ago
    What is this, some achievement? This smuggling should be stopped in its entirety. Its because of corruption that it still exists. Kerala has already shown how big a nexus is involved.
    Lohith Sharma31 days ago
    why everyone is talking to
    reduce taxes on gold, physical gold is not good for economy, the more gold the less liquidity, and cause severe economic problems
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