New Delhi: The coronavirus pandemic and resulting lockdown has dramatically reduced the inflow of gold smuggled into India, which happens to be the world's second-biggest consumer of the precious metal.
N. Anantha Padmanaban, chairman of the All India Gem and Jewellery Domestic Council, has informed that the inflow of illegal gold to India has reached a low of of 2 tons a month. This year, only about 25 tons are likely to be smuggled. In contrast, 120 tons were smuggled last year, which is about 17% of the nation's annual demand, according to the World Gold Council.
According to Padmanaban, whatever gold is being smuggled is coming from the land borders with Nepal, Pakistan, Bangladesh, and Sri Lanka and not much from airports -- the usual smuggling route.
The illegal shipments have been hit by the coronavirus-induced lockdown that was clamped across the country in March. Flights and trains were also halted, and inter-district travel was also strictly monitored.
Additionally, the economic downturn brought about by the extended lockdown has also seen the demand for gold take a nosedive. The Indian economy contracted by almost a quarter in the three months through June.
Although the curbs are being gradually removed in a bid to resurrect the economy, the country is yet to fully open up its borders owing to rise in COVID-19 cases.
The monthly average of smuggled gold caught at Indian airports has plunged to a six-year low of 20.6 kilograms in the year started April, according to Bloomberg calculations.
Gold smugglers have benefited from record-high prices and a 12.5% import tax that India imposes on shipments of the metal. This means that illegal purchases of the metal are far cheaper.
Indian jewelers, fully aware of this, have been urging the government to slash the import tax by 50% so that the import of gold can be legalized.
Once flights resume in full swing, India's gold smuggling problems are expected to continue with removal of the import duty on gold by Sri Lanka this month.