India’s high import duty has seen the return of smuggling rings using passengers as couriers
Dubai: There has been an increase in arrests this year of passengers from Dubai smuggling gold into India as airport customs officials clamp down hard on the practice, media reports in India show.
Incidents of smuggling gold on Dubai-India flights have been rising as India continues to enforce a record high 10 per cent import duty on gold as part of measures to offset a weakening rupee.
Traders say Dubai is possibly the world’s cheapest place to buy gold as there is no tax on the precious metal and “making charges” on jewellery are low. The arrangement makes it very profitable for smugglers to buy gold in Dubai and sell it in India at a handsome premium — if they don’t get caught.
Just last week it was revealed in the Indian Express that some employees at Kochi airport in India were allegedly working with passengers from Dubai trained as carriers of gold. Over the past few months, authorities have so far amassed evidence of 1.8 tonnes of gold collectively smuggled through the couriers, the report added.
Also about a week ago, the Business Standard reported that the Air Intelligence Unit of Mumbai Customs seized 6.2kg of gold in two different seizures — all involving passengers from Dubai, including six members of a family who hid the gold in secret pockets in their clothes, according to Customs officials.
And since last month, an Indian newspaper reported, there have been at least two instances of passengers from Dubai attempting to take gold past Customs without declaring it at a small airport in Tamil Nadu state. In the first case, seven passengers were found carrying gold inside their bodies. In the other instance, the couriers were two women, who had also travelled on a flight from Dubai via Hyderabad.
Also in June, officials at an airport in Goa state caught a passenger from Dubai for allegedly smuggling around 7.7kg of gold, media reports said.
And earlier this year in February, police in Gujarat state revealed they had made the single biggest seizure of gold smuggled into India after arresting six people leaving an airport with 60kg of the yellow metal flown in from Dubai, Reuters had reported. Three passengers had reportedly admitted that traders had paid them up to $1,600 (Dh5,877) for one trip. Their air tickets, food and hotel costs were provided for free.
There are many other instances reported in the media that point towards a steady flow of carriers from Dubai trying to land undeclared gold in India. The ratio of successful attempts is not known but the World Gold Council estimates that smuggling rings imported 175 tonnes of gold into India last year.
A Dubai resident said on condition of anonymity that several young Indian men have quit their day jobs to “do this full-time”. He added that the carriers “make several thousand dirhams per trip”.
“So, if they make a few runs each month, that’s tens of thousands of dirhams in the pocket. They don’t take so much on a single trip that can earn them a long jail sentence if they get caught. They just pay the duty and penalty if they get caught,” the resident said.
One trader said each 100gm of gold can earn them around Dh1,040 in the “price gap” between Dubai and India.
Dubai-based gold traders say despite the strict rules and high duty on gold entering India, many Indians travel to Dubai specifically to purchase “competitively-priced, high quality gold and gold jewellery”.
“Depending on what you buy, how much and from which shop, the difference in price between Dubai and India can be 15 per cent. So, even if you declare the gold and pay the 10 per cent duty, you have still saved five per cent on your purchase. Or you have made five per cent, if you are selling it later,” a manager at a gold shop said on condition of anonymity.
“People do this in groups to share the cost of tickets, hotel rooms and food. They pool the money and buy in bigger amounts, so the net saving is bigger. And if they can get away with it [not paying duty] — and some of them do get away with it — that’s a bonanza for them.”
Under the rules, male passengers who are bringing in gold valued at less than Rs50,000 (Dh2,891) and female passengers bringing in gold worth less than Rs100,000 (Dh5,782) don’t have to pay the 10 per cent duty.
The weight of gold in baggage, including ornaments, should not exceed one kilo per passenger, India’s Central Board of Excise and Customs says.
Flying gold into India, where there is a 10 per cent import duty, sometimes lands the gold carriers in trouble. Here are some clever, yet failed, smuggling attempts over time.
■ A family of six stitched secret pockets into their clothes to hide the gold. They had to reveal the stash after alert airport intelligence officers exposed the plot.
■ A passenger tried to smuggle gold in the form of staple pins, assuming the metal detectors cannot differentiate between steel and gold. They can.
■ One carrier had stuffed gold inside a transformer, which customs personnel reckoned was too heavy for its size. A check unearthed gold rolled into wires around the unit’s coil.
■ Two passengers tried hiding white gold under stickers on their bags. Since the stickers looked unusually thick, officials checked and found the gold. A passenger left gold bars hidden between an airplane seat
and its cover. The assumed plan was to have an insider help recover the gold later, after the flight continued to a different city. However, it was rescheduled for a layover and the bars were uncovered by the cleaning staff between the trips.