An increase in the import duty hasn’t dampened Indians’ appetite for gold. It’s just pushed the market underground.
Gold is such an important part of the Indian economy, people will do whatever they have to in order to get their hands on the yellow metal – including skirt the law. According to a recent report by the Hindu, occurrences of gold smuggling have risen rapidly in the wake of higher import taxes.
Ever since the import duty on gold was raised to 10%, the country has reportedly witnessed a rapid rise in the quantum of gold brought into the country illegally. Currently, government levies total 13%, including IGST of 3%.’
Government efforts to crack down on smuggling have proven largely ineffective. Officials estimate customs agents and police have intercepted less than 10% of the gold entering the country illegally. Police do a better job of catching smugglers traveling by air from West Asia and south-east Asia, but officials say gold brought in through the international waters of Sri Lanka and the porous borders of Myanmar, Thailand, Nepal, Bangladesh, and Pakistan is seldom tracked.
This post was published at Schiffgold on OCTOBER 23, 2017.