Barrick says Ontario Superior Court dismisses 2022 Tanzanian security case
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Gold smuggling in India has declined as a lack of international flights thwarts grey market operators and serves to boost the premium legal importers can charge, industry officials said on Wednesday.
Dealers, speaking on condition of anonymity, said the reduced supply of smuggled gold had driven Indian spot prices to a premium this week for the first time this year, adding to bullish sentiment on the gold market.
Indian gold futures hit an all-time high of 49,045 rupees per 10 grams on Wednesday, taking gains to 25% in 2020 so far after they rallied by a quarter in the whole of 2019.
Gold smuggling into India had been increasing since 2013
Gold smuggling into India, the biggest gold consumer apart from China, had been increasing since 2013 when New Delhi raised the import tax to 10%, followed by a rise to 12.5% in 2019.
In 2017, a 3% sales tax further increased the margin for grey market operators that smuggle gold from overseas and sell it for cash to avoid duties.
“Smuggling can be expected to go down substantially in the current scenario. Smuggling logistics were also severely affected during lockdown,” Somasundaram P.R., head of the World Gold Council’s (WGC) Indian operations, told Reuters.
He said he could not give figures, but expected smuggled volumes this year would be significantly below the 115-120 tonnes of gold the WGC said was smuggled into India in 2019.
India suspended long-distance trains and international flights in March as part of the lockdown of its 1.3 billion population to contain the novel coronavirus. Some domestic flights have resumed, but uncertainty around travel is high as the number of coronavirus infections has surged.
Surendra Mehta, secretary at the India Bullion and Jewellers’ Association (IBJA), also said smugglers were unable to operate as they had previously.
Because they evade duties, the grey market operators usually sell gold at discounts to market prices, which in turn forces competing dealers to lower prices.
As they have almost disappeared from the market, legal Indian dealers were charging a premium of up to $3 an ounce over official domestic prices this week, compared with a discount of $22 an ounce last week.
In theory, the price rise can in turn boost smugglers’ margins and allow them to offer increased discounts.
For now, however, they cannot offer meaningful discounts because of limited supplies, a bullion dealer based at Kochi in southern state of Kerala, said.
(By Rajendra Jadhav; Editing by Sanjeev Miglani and Barbara Lewis)
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