KOLKATA: A fall in premium on gold amid softening demand has led to decline in smuggling this year, traders said citing industry estimates of an expected 150 tonnes compared to 200 tonnes last year.
There are two main reasons for the decline in smuggling, said Ketan Shroff, spokesperson for Indian Bullion and Jewellers’ Association. “First, there is no trigger right now to smuggle gold as there is hardly any demand for the yellow metal in the market. Second, the customs and the directorate of revenue intelligence are taking active steps to control smuggling to a great extent.”
Traders said higher imports by banks and other trading companies pushed gold prices in India to a discount over London prices in May and June, making smuggling less attractive.
Illegal imports have come down dramatically, said Somasundaram PR, managing director, World Gold Council India.”The incentive to smuggle is very low,” he said.
This is so even as the World Gold Council has pegged the gold demand in India at 900-1,000 tonnes this year, compared to 875 tonnes last year.
Gold imports shot up 62.2 per cent to $2.96 billion last month, compared to $1.82 billion in July 2014. The spike came after imports slumped 37 per cent in June over the year-ago figure to $1.96 billion. Higher gold imports in July pushed India’s trade deficit to an eight-month high of $12.81 billion.
Saurabh Gadgil, vice-president of Indian Bullion and Jew ellers’ Association also attri buted the decline in smuggling over the past few months to the lack of demand. “It can be stop ped fully if the import duty on gold, which is now at 10 per cent, is re duced. It may so happen that smuggling may increase during Diwali and Dhanteras as Indian consumers will purchase gold during this auspicious period However despite that, smuggling will be lower and may be around 150 tonnes (in 2015),” he said.
