Gold smuggling in India rises to 50 tonnes after import duty hike
Illegal gold shipments jumped from 3 tonnes to 50 tonnes in the September quarter as import levies increased to 15 per cent.
Gold smuggling in India rose to approximately 50 tonnes in the September quarter, up from just 3 tonnes during the same period last year, according to a World Gold Council (WGC) report. The surge follows a government increase in import duty from 6 per cent to 15 per cent, which has made official imports more expensive.
The WGC report, which cited data from consultancy Metals Focus, noted that informal shipments jumped more than 1,500 per cent. The increase in duty has created more incentive to use unofficial supply routes, according to a report by ET.
While gold demand recovered 24 per cent sequentially to 162 tonnes in the previous quarter due to seasonal jewellery purchases, it remained 29 per cent lower than the year-ago level. High prices have continued to deter many buyers, according to the Times of India.
Jewellery demand rose 33 per cent sequentially to 100 tonnes, but volumes were 20 per cent lower than a year earlier in the quarter. Investment demand for bars and coins increased 9 per cent sequentially to 55 tonnes, though this was 40 per cent lower year-on-year.
In the first nine months of the year, expenditure on gold increased 3 per cent year-on-year and 38 per cent sequentially. This suggests consumers are spending more even as they purchase smaller quantities.
Festive-season and wedding-season purchases are expected to support the market in the December quarter, though high prices may continue to weigh on jewellery volumes.