INTRODUCTION
Importing goods into a country through illegal means is known as Smuggling. It may involve either bringing illegal goods or legal goods without paying taxes into the nation.[1] As per sec 2(39) of the Customs Act,1962 Smuggling, in respect to any goods, is defined as any act or omission that renders such goods vulnerable to confiscation under sections 111 or 113 of the Customs Act of 1962.[2] Any goods imported by sea or air that are unloaded or attempted to be unloaded outside of a customs port or airport, as well as any dutiable or prohibited goods discovered concealed in any way in any conveyance, are subject to confiscation under Section 111 of the Customs Act of 1962.[3] Tobacco, cigarettes, electronics, gold, narcotics, idols, statues, antiques, and cell phones are the most often counterfeited and smuggled things. Among them, the most prominent one is Gold Smuggling. India is notorious for its smuggling because of its high desire for gold. Since imports provide the majority of the demand, there are chances for smugglers to make rapid money by bringing in gold stockpiles through illegal means.
SIGNIFICANCE OF GOLD TO INDIANS:
The second-largest purchaser of gold jewellery in the world is India. Indian families possess a staggering amount of gold, up to 25,000 tonnes, according to estimates.[4]It is used as a jewel for adornment. Indians consider the Gold as Goddess Laxmi. Indians use gold to depict their social status. No matter what the condition of the family, they try to present gold to the bride in the marriage. At least half of the market share is taken up only by bridal jewellery. People fear that if they have money it will get stolen, so they buy gold from the money and store it in banks or houses. Gold can also be used as collateral.
REASONS FOR GOLD SMUGGLING IN INDIA:
- High demand and Low Production of Gold:
India has a high demand for Gold.India purchased 611 tonnes of gold jewellery in 2021, behind only China (673 tonnes) but easily outpacing all other gold-consuming economies.[5] A relatively little amount of gold is produced in India; the rest of the precious metal, whether in the form of bars or refined gold, is imported. As a result of gold prices surpassing Rs 60,000 per 10g, officials assert that the “profit” from gold smuggling has increased from 15% to 20%.[6] The restricted usage of recycled gold in India also limits the availability of gold. The Indian economy depends heavily on the gold sector, which generates 1.3% of the country’s GDP, claims the World Gold Council (WGC). But it is still fragmented, with small and medium-sized businesses dominating it.[7]
- Gold Reserves:
Government preserves its money in the form of Gold Reserves which may lead to a deficient supply of Gold in the Market. In May 2023, India’s gold reserves were estimated to be worth 44.999 billion USD. India Gold Reserves data averages 486.000 USD million from Dec 1956 to May 2023.[8] If this gold is released into the market, demand may meet its supply and the price of gold may decrease.
- Import taxes:
Gold bars and gold doré now have total customs taxes of 15% and 14.35%, respectively. The Goods and Services Tax (GST) has been increased by 3%, bringing the total tax paid by customers for refined gold to 18.45%. [9]Similar to how the gold refinery will now pay 17.78% tax for gold doré instead of the prior 13.39% charge. [10] Hence, to escape this import duty, People illegally smuggle the gold into the country.
AUTHORITIES EMPOWERED TO COMBAT GOLD SMUGGLING
The DRI (Directorate of Revenue Intelligence) is dedicated to stopping all forms of cross-border crime involving the smuggling of items like fake Indian currency notes, consumer goods, drugs, and narcotics, among other things. In 2021–2022, the DRI reportedly collected 833 kilograms of illicit gold.[11]
Section 112 of the Customs Act of 1962, as well as several sections of the Unlawful Activities (Prevention) Act of 1967 (UAPA) and the Foreign Trade (Development and Regulation) Act of 1992, provide for penalties and punishments for those who engage in gold smuggling.[12]
METHODS OF GOLD SMUGGLING:
There are several methods that gold is brought into the nation illegally. It can be done via land, sea, or air. In India, airports are used for significant smuggling. Airport-based international trade is most popular in Delhi, Kolkata, Chennai, and Mumbai, among other places. Prior to the epidemic, the airports in Delhi, Mumbai, and Chennai all discovered 494 kg, 403 kg, and 392 kg, respectively, of smuggled gold. [13]Hundreds of “carriers” assist in the illicit trade, which is also made possible by the complicity of dishonest law enforcement agents and even airline employees. A carrier may choose to carry it in their pockets, conceal it in their body, sew it inside of their garments, hide it in their shoes, coats, or specialty belts, or any combination of these methods. Gold can be hidden in toys, shoes, machine parts, luggage lining, false cavities of trolley bags, shoes and specially designed belts, computers, and mobile phones, in-flight washrooms, under-seats, and even body crevices. Gold is smuggled in as gold dust or in liquid form as well. Gold can be powdered and mixed with iron and Potassium. Several youngsters are lured to carry contraband with 10000 plus a foreign trip and a small shopping voucher.[14] Passengers on sponsored trips to gulf countries can be lured to hide gold in their luggage.[15]
Sometimes aviation Staff also abets in the smuggling of gold. Gold smuggling appears to have turned into an appealing side business for certain aviation workers since gold prices have skyrocketed recently and import taxes on the precious metal have increased. The most smuggled gold in four years was discovered in the first eleven months of 2022–2023 with 4,000 kg.[16] According to statistics from the Department of Revenue, more than 63% of this smuggled gold was discovered at airports, with the remainder discovered after it had already entered the nation in cities including Darbhanga, Mumbai, Pune, Ludhiana, Surat, Chennai, Madurai, and Bengaluru.[17]
SOURCES OF ILLICIT GOLD INFLOW
According to jewellers, 720 tonnes of gold enter India annually, of which 380 tonnes enter legitimately and the remaining 340 tonnes enter illegally. According to the “Smuggling in India 2021-22” report published in December 2022 by finance minister Nirmala Sitharaman, 37% of the gold recovered in 2021–2022 originated in Burma, while 20% did so in West Asia.[18] In sum, Bangladesh and Myanmar were used to enter 73% of the gold that was being trafficked. The United Arab Emirates, which receives 75% of the gold entering the nation, is where the majority of the gold that is smuggled into India arrives.[19] Smugglers can enter India through different methods thanks to the country’s expansive, mostly unguarded borders to the east. According to WGC, just 2% of the gold sold illegally in India is seized.[20]
SUGGESTIONS & CONCLUSION
The mere confiscation rate for illegal gold does nothing to deter traffickers, who sometimes employ mules for the job. Mules are frequently poor people who are forced or blackmailed into smuggling gold for small cash. Numerous steps are being taken by the government and law enforcement to address the issue. Even now, they are attempting to utilize the Unlawful Activities (Prevention) Act to bring criminal charges against people who are discovered attempting to smuggle gold into the nation. The following are some suggestions to reduce Gold Smuggling in India. They are:
- Custom duties on Gold Imports should be reduced along with Gold reserves.
- Increase surveillance in ports and airports or other areas where gold smuggling may occur.
- Punish those who do or abets in gold smuggling severely and those government officials also.
- Pass the law to regulate gold sales in India
- In cases of gold smuggling, investigate thoroughly and know the root cause of the problem
- Keep surveillance on jewellery shops on how and from where they are getting gold.
Author(s) Name: Author(s) Name: Marru Vaaghdevi (Damodaram Sanjivayya National Law University, Visakhapatnam)
Reference(s):
[1]‘Smuggling’,(Cambridge dictionary) <https://dictionary.cambridge.org/dictionary/english/smuggling> accessed 7 June 2023
[2]Customs Act 1962, s 2(39)
[3]Customs Act 1962,s 111
[4]Editor, ‘Gold investment market and financialisation: India gold market series’(World Gold Council Gold Industry and Corporate, July 12, 2023) <https://www.gold.org/goldhub/research/gold-investment-market-and-financialisation-india-gold-market-series#footnote-3> accessed 5 July 2023
[5]Editor, ‘Jewellery demand and trade: India Gold Market Series’ (World Gold Council Gold Industry and Corporate, Jan 19, 2023) <https://www.gold.org/goldhub/research/jewellery-demand-and-trade-india-gold-market-series> accessed 5 July 2023
[6] ‘Gold Smuggling, What Is It and Why Does It Happen?’ (cnbctv18.com, August 28 2021) <https://www.cnbctv18.com/business/gold-smuggling-what-is-it-and-why-does-it-happen-10529971.htm> accessed 21 May 2023
[7]Editor,’ Domestic Gold Industry Contributes 1.3% To Indian GDP’ (Business Standard, Sep 29 2022
<https://www.business-standard.com/article/news-cm/domestic-gold-industry-contributes-1-3-to-indian-gdp-122092900621_1.html> accessed 21 May 2023
[8]‘India Gold Reserves’(CEIC,2023)<https://www.ceicdata.com/en/indicator/india/gold-reserves> accessed 21 May 2023
[9]Mukesh Kumar, ‘India’s gold import duties hiked | World Gold Council’( World Gold Council Gold Industry and Corporate, July 6, 2022)<https://www.gold.org/goldhub/gold-focus/2022/07/indias-gold-import-duties-hiked-world-gold-council> accessed 21 May 2023
[10]ibid
[11]S Ahmed Ali,’Mumbai airport biggest hub of gold smuggling in India’(Times of India, April 4,2023)
<https://timesofindia.indiatimes.com/business/india-business/mumbai-airport-biggest-hub-of-gold-smuggling-in-india/articleshow/99223322.cms?from=mdr> accessed 21 June 2023
[12] ibid
[13] n 11
[14]n 11
[15]n 11
[16]VIKAS DHOOT, ‘Cases of aviation staff caught smuggling gold doubled in 2022-23’(The Hindu,April 23, 2023)<https://www.thehindu.com/news/national/cases-of-aviation-staff-caught-smuggling-gold-doubled-in-2022-23/article66771080.ece> accessed 1 July 2023
[17]ibid
[18]Kalpana Sunder ,‘India Seizes 3,000kg of Smuggled Gold as Mafia Target Poor to Sneak in Metal’ (South China Morning Post, January 5 2023)<https://www.scmp.com/weekasia/economics/article/3205659/smuggling-cases-rising-can-india-set-gold-standard-prevent-illegal-trade-precious-metal> accessed 20 May 2023
[19]ibid
[20] n 18
