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Gold smuggling jumps to 50 tonnes as 15 pc import duty widens gap for unofficial supply

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Gold smuggling jumps to 50 tonnes as 15 pc import duty widens gap for unofficial supply

Gold smuggling jumps to 50 tonnes as 15 pc import duty widens gap for unofficial supply

Gold smuggling in India is estimated to have surged to 50 tonnes in the September quarter from three tonnes a year earlier after import duty rose to 15% from 6%, according to the World Gold Council. Meanwhile, demand remained 29% lower year-on-year as record-high prices weighed on purchases.

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Kolkata: India, the world's second-largest gold market, is witnessing a sharp shift in supply dynamics, as an increase in import duty to 15% from 6% has triggered a surge in unofficial inflows even as record-high prices weigh on consumer demand.

Smuggling is estimated to have soared to around 50 tonnes in the September quarter from just three tonnes a year ago, highlighting the unintended consequences of higher import costs, according to a World Gold Council report .

While gold demand rebounded 24% sequentially to 162 tonnes last quarter, led by seasonal jewellery buying, it remained 29% lower year-on-year as elevated prices kept many potential buyers away. Spending, however, remained resilient, rising 3% YoY and 38% sequentially in the first nine months of the year, indicating consumers are continuing to spend more despite buying less gold.

Jewellery demand led the recovery, rising 33% sequentially to 100 tonnes, supported by seasonal purchases and some softening in prices towards the end of the quarter. However, volumes were still down 20% from a year earlier last quarter and 18% lower during the first nine months, reflecting the growing affordability challenge for consumers.


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