(Kitco News) – With the Indian government expected to maintain its 10% tariff on gold imports,smugglers appear to be getting a lot more creative to get their undeclared metals into the country to meet steady demand. On Thursday, the customs office at the Mangalore International Airport said officers caught two passengers travelling from Dubai who were trying to smuggle gold in the form of foil. According to media reports, a total 1.34 kilograms, or about 43 ounces, of gold was confiscated. With gold spot prices hovering above $1,230 an ounce, the confiscated gold is currently valued at $52,890.
The humoristic smuggling attempts underscores a much bigger problem being felt throughout the country. Gold smuggling has been on the rise in India since mid 2013 as the government raised import tariffs to 10% in an attempt to lower the country’s massive current account deficit.
“People might be buying less gold and waiting for the tariffs to be reduced but the demand is still there,” said Jeff Nichols, senior economic advisor at Rosland Capital, who agreed that demand for gold in India remains high, which is why smuggling has been so profitable lately. “As long as it is profitable, gold will be smuggled into the country.”
Looking at the overall gold sector within the country, Somasundaram said that they are expecting demand to be between 850 to 900 metric tons for 2014
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