Breaching borders and beating tax, India's gold smugglers get creative

India’s immense appetite for gold means smugglers are getting more creative to bypass the country’s high import tax.

The Directorate of Revenue Intelligence arrested four people last week for smuggling in 66 kilograms of gold, worth about Rs 210 million rupees, and seized fours cars in operations in West Bengal and Uttar Pradesh that border Nepal, Bhutan and Bangladesh, according to a statement on the Press Information Bureau. Indians can travel to Bhutan and Nepal freely because of bilateral treaties.

The world’s second-biggest consumer raised import taxes three times in 2013 to control a record current-account deficit, with the rate still standing at 10 percent. The high duties spurred a spate of smuggling, including attempts to bring in bullion via planes and trains. The cars seized last week had gold concealed in a specially-built box fixed behind the dash board and also in cavities near the car’s gearbox or driver’s seat.

One of the operations was prompted after the DRI received information that a syndicate was attempting to smuggle foreign gold from Bhutan into India through the countries’ land border.

Customs authorities seized about 2.63 tons of gold between April and November, according to Monday’s statement. That compares with 3.22 tons in the 2017-18 financial year, more than double the volume seized in 2016-17. Bullion is suspected to be smuggled through India’s land borders with Bangladesh, Myanmar, Nepal, Bhutan and China, it said.

The amounts are tiny compared with demand of 771 tons last year and about 200 tons that was brought in illegally at its peak in 2014, according to a trade group.