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  • 28 April, 2023

  • 4 Min Read

Smuggling of Gold

  • Airports discovered more than 63% of this illegal gold.
  • The Department of Revenue Intelligence recently conducted the Golden Dawn Operation across India, seizing 101.7 kg of illegal gold valued at Rs 51 crore.
  • Despite the fact that India receives a legal import of about 800-1,000 tonnes of gold each year, the illicit market is thought to be about 4,000 tonnes larger.

How much gold enters India illegally?

  • In FY 2021–22, 833 kg of smuggled gold totalling approximately Rs 500 crore was seized, according to the Directorate of Revenue Intelligence's (DRI) Smuggling in India Report 2021–22.
  • Smuggling from the Gulf region had decreased in 2020–21 as a result of flights being cancelled owing to the Covid–19 pandemic.
  • In the five years leading up to August 2020, 16,555 smuggling instances involving more than 11 tonnes of gold were busted at airports all throughout India.
  • The data given only represents the gold that was actually taken; nevertheless, considerably more gold may have been smuggled in than what the authorities discovered.
  • The World Gold Council (WGC) estimates that due to the increase in the import duty on gold from 7.5% to 12.5%, smuggling might rise by 33% to 160 tonnes in 2022 compared to the pre-Covid period.
  • The majority of the gold smuggled into India during the past ten years has come from Maharashtra, followed by Tamil Nadu and Kerala.
  • India imports enough to meet more than 90% of its needs. India was the world's second-largest gold importer in terms of value in 2021.
  • In 2009, China surpassed India as the world's top gold consumer, according to a recent World Gold Council report. India purchased 611 t of gold jewellery in 2021, behind only China (673 t), but still far ahead of all other gold-consuming markets.

What is Smuggling?

  • The illicit transportation of goods is known as smuggling. These products can be lawful (like alcohol and tobacco) illegal (like illegal drugs and weapons), or both. Another type of smuggling is the illegal trafficking of immigrants.
  • Smuggling affects the economy and national security negatively on a number of levels. Encouraging crime, supporting terrorism, and creating and circulating black money internationally, can further destabilise nations.

North East Smuggling Route:

  • According to the DRI Report, Bangladesh and Myanmar were used to smuggle 73% of the gold that was seized.

  • Myanmar supplied 37% of all the gold captured in FY22. West Asia provided 20% of it.
  • According to numerous international sources, the towns of Muse and Ruili, which are on the Chinese and Myanmarese sides of the border, respectively, are used to smuggle gold into Myanmar from China.
  • Ruili is in the Dehong Dai Prefecture of Yunnan Province, China, and Muse is in the Shan State in northeastern Myanmar.

How much gold is imported into India?

  • Additionally, increasing gold imports made through authorised channels, represent a significant outflow of foreign currency.
  • A rise from Rs 2.54 lakh crore in 2020–21 to Rs 3.44 lakh crore in 2021–22 was reported for imports.
  • India is the world's second-largest gold consumer after China, importing around 900 tonnes of gold annually, with consumption reaching 797.3 tonnes in 2021 (the most in the previous five years), according to the World Gold Council.
  • India imports refined gold as well as gold dore bars.
  • Gold dore bar imports accounted for 30% of all official imports of the yellow metal into India over the previous five years.

Issues related to smuggling

  • Price distortion: Products that are smuggled into the country are sometimes offered for a lot less than those that are legally imported. Smuggling eliminates free competition for businesses by putting them in unfair rivalry with others who have paid taxes.

  • Increase in Unemployment: The labour market (employment base) is eroded when unfair competition in the market is exacerbated by the collapse of industries. Professionals, skilled workers, and unskilled workers are all still without jobs.
  • Health Concerns: Most illegal products, including drugs, are of poor quality and dangerous to the lives of those who consume them. It might put customers at risk for a number of illnesses.
  • Smuggling is harmful to national security because it can lead to unrest, particularly when illegal items like firearms are involved. Such commodities wind up in the hands of a select few individuals who can use them to undermine the security of the nation's residents.
What is the Directorate of Revenue Intelligence?
  • It serves as India's primary intelligence, investigation, and operations agency against smuggling.
  • It reports to the Ministry of Finance's Central Board of Indirect Taxes and Customs (CBIC).
  • A Director General with the status of Special Secretary to the Government of India serves as its administrator.
  • By actively stopping the smuggling of weapons, gold, drugs, fraudulent Indian currency notes, antiquities, wildlife, and environmental goods, DRI aims to protect India's economic and national security.
  • Additionally, it helps to stop the spread of illegal currency, business fraud, and trade-based money laundering.
  • Its main office is in New Delhi.
Way Ahead
  • Counterfeiting and smuggling must be addressed with strong public policy and enforcement.
  • In addition to cracking down on grey markets domestically, law enforcement and tax agencies need to step up their game with stronger cross-border coordination and trade-data reconciliations.
  • Declaring an Anti-Smuggling Day is necessary, and cooperation with other nations is required to make this a worldwide endeavour.

Source: The Hindu

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