New Delhi - Hidden in rectums, mobile phones and televisions, the smuggling of gold into India has increased phenomenally since April, when the government imposed strict curbs on official imports.
Struggling with a runaway current account deficit and a falling rupee, the government imposed a 10-per-cent duty on gold bullion imports in April, up from 8 per cent.
It had earlier banned all imports of gold coins and ruled in July that 20 per cent of all imported bullion would have to be re-exported as gold jewellery.
India is one of the world's largest consumers of gold, which is second only to oil in its import basket.
The country imported 860 tons of gold in 2012-13.
Indians traditionally hoard gold.
Women buy gold jewellery on festivals, and it is given to brides as a dowry when they get married.
Women accumulate gold ornaments bit by bit over a lifetime - often adding to an inherited stash of jewellery.
Gold is rarely sold except in cases of extreme emergency, when bangles and necklaces are pawned.
“With the publicity made by the government requesting people not to buy gold to help reduce the current account deficit, the demand has come down. But it is still much higher than supply and has opened up a huge grey economy,” said Ashok Minawala, former chairman of the All-India Gems and Jewellery Trade Federation.
Official gold imports fell from 16.4 billion dollars' worth in the April-June quarter to 3.9 billion dollars in July-September.
But illicit imports jumped to meet Indians' insatiable thirst for the precious metal. Between April and September this year, customs officials at ports and airports made seizures worth 15.3 billion rupees (about 2.47 billion dollars), an official of the Revenue Intelligence Department said.
That compares to 2.8 billion rupees in the same period last year.
“We seized 570 kilograms of gold in the six months since April, compared to 94 kilograms in the same period last year,” the official said.
Industry watchers say much more has come in undetected. Most of the smuggled gold comes from the Middle East, Thailand and Singapore.
The rate for a gram of 24-carat gold in Dubai and Thailand is around 39 to 40 dollars, while in India it ranges between 48 and 50 dollars.
“All of a sudden there has been a surge of gold imports in countries around India, which are not gold-consuming countries as such,” the Revenue Intelligence official said.
The smugglers - Indian men, women and foreigners looking to make a quick buck - are finding innovative ways to bring in the illegal gold.
“We routinely find gold stashed in battery spaces of mobiles and laptops. We also found gold dust in packets marked 'henna powder,'“ said Milind Lanjewar, additional commissioner of customs at Mumbai airport.
Henna is used as a dye by Indians to colour hair and paint ornamental designs on the palms of women at weddings and festivals.
Customs officials at Kolkata airport found gold bars worth about 1.4 million dollars, with a Dubai trademark, stashed in a toilet in a plane belonging to a commercial airline in November.
The plane had been flying between two eastern cities but had earlier been flying the Mumbai-Dubai route.
Officials suspect the gold was hidden in the toilet so it could be taken out later, when it flew on a domestic route.
“We've made over 30 seizures since April,” said R Meena, deputy commissioner of customs at the Kolkata airport.
“If we find batteries in pockets and luggage, we check the gadget. Sometimes we find laxative tablets in their pockets or they have odd body language, that means they may have a gold bar stashed up their rectum.”
The Kolkata customs officials have seized 48 kilograms of gold since April, compared to 4.5 kilograms in the April 2012-March 2013 period.
Between April and October, 73 kilograms were seized at Mumbai, compared to 30.98 kilograms in the same period in 2012.
At the three international airports in Kerala, which has several flights from the Middle East, 60 kilograms of gold was seized during April-October.
Kochi airport officials were quoted as saying by India Today news magazine that they had found gold bars and biscuits in battery compartments of mobile phones, emergency lamps, and waist belts worn by passengers.
While India's organised jewellery sector is struggling to make ends meet - Minawala says 20 per cent of businesses have closed down and another 30 per cent are in deep trouble - the sprawling, unorganised sector is a thriving market for smuggled gold. - Sapa-dpa