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Rediff.com  » Business » Gold smuggling rises as import ban continues

Gold smuggling rises as import ban continues

Last updated on: May 21, 2014 10:47 IST

Image: A model presents a creation by jewellery designer Mukhi during a show at Joaillerie Liban Exhibition 09 in Beirut.
Photographs: Jamal Saidi/Reuters Dilip Kumar Jha

Around 50 tonnes of gold entered India in the first quarter (January-March) of 2014 through smuggling, estimates the World Gold Council (WGC), due to continued restrictions on imports through official channels.

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Tags: WGC , India

Gold smuggling rises as import ban continues

Image: A goldsmith arranges gold bangles at a jewellery shop.
Photographs: Murad Sezer/Reuters

Somasundaram P R, managing director of WGC India at the issue of its Gold Demand Trend report for the period said,  “Broadly, we estimate 20-25 per cent of gold demand is met through smuggling, which continued in the first quarter of (calendar year) 2014 as well.”

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Gold smuggling rises as import ban continues

Image: A pawn shop worker sorts through gold jewellery at Easy Money Pawn shop.
Photographs: Athit Perawongmetha/Reuters

WGC had earlier estimated around 200 tonnes of gold was brought into India through smuggling in calendar year 2013.  

“Gold continued to enter through unofficial channels and whilst the estimate of the grey market varies, there is now far great understanding of the adverse impact it is having on the Indian gold industry and genuine consumers,” said Somasundaram.

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Gold smuggling rises as import ban continues

Image: India primarily imports gold jewellery from West Asian countries.
Photographs: Reuters

To curb the current account deficit, the Union government has restricted banks on import of gold coins and medallions.  

India primarily imports gold jewellery from West Asian countries.

Gold sales in the region rose to 66.2 tonnes in the first quarter of 2014, compared with 57.1 tonnes in the corresponding period last year. Gold sales in Saudi Arabia, Egypt and the UAE moved up nine per cent, 26 per cent and 16 per cent, respectively.

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Gold smuggling rises as import ban continues

Image: Gold dend is expected to moderate in the second quarter of 2014.
Photographs: Reuters

The government is concerned about the rise in smuggling and there are expectations that it will take some steps to control this.

Overall gold demand is expected to moderate in the second quarter of 2014, since a price decline is expected and consumers might defer purchases.

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