Gold-hungry traders tap Indians living abroad

MUMBAI Wed Dec 25, 2013 3:48am IST

1 of 2. Gold biscuits are seen in this picture illustration taken inside a jewellery showroom in Mumbai June 4, 2013.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - Non-resident Indians are bringing gold into the country by taking advantage of rules that allow each individual to carry 1 kg of the metal, helping traders cope with restrictions on imports during the peak wedding season.

India, vying with China to be the top buyer of gold, has choked imports to narrow its trade gap and curb the outflow of dollars. The measures included raising the import duty to a record 10 percent and making it mandatory to export as jewellery 20 percent of all gold imports.

But non-residents who have stayed abroad for more than six months can bring in gold on payment of the import duty, irrespective of end use. Such is the demand that some traders are paying passengers' air fares if they agree to carry gold.

About 80 kg of gold was brought in by non-resident Indians (NRIs) this month on a flight from Dubai to Calicut in the southern state of Kerala, said an airport official who did not want to be identified.

Travel agents typically book about 20-30 tickets on a flight on behalf of NRIs, who are accompanied by people working for traders, said Bachhraj Bamalwa, director of the All India Gems and Jewellery Trade Federation, an umbrella body of more than 300,000 jewellers.

"These NRIs pay the duty, so there is nothing illegal about it," Bamalwa said. "These people are mainly labourers from Tamil Nadu or Kerala, who are given a free ticket."

Government officials estimate NRIs have imported a tonne of gold since mid-November, compared to nearly nothing in previous months. That's a boon for jewellers, many of which have been operating at half capacity due to a lack of stock.

Official gold imports fell to about 21 tonnes in November, less than half the monthly requirement, data from metals consultancy Thomson Reuters GFMS showed.

Gold premiums in India rose to a record $160 per ounce on London prices earlier in December.

"To take advantage of high premiums, agents have been increasingly successful in scouting for NRIs, and pay for their partial or full air fare," said Sudheesh Nambiath, an analyst with Thomson Reuters GFMS.

NRIs can save 125,000 to 150,000 rupees per kg on premiums even after paying the import duty, industry officials said.

The import curbs are also encouraging smuggling, with customs officials between April and September seizing nearly double the amount of smuggled gold nabbed in all of 2012, according to the customs department.

(Editing by Dale Hudson)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (2)
jvaishnav47 wrote:
Gold-hungry traders tap Indians living abroad
———————————————-
Nothing wrong, since it amounts to official import by NRIs

What is need of the hour, gold smuggling has become rampant, smugglers hide metal in body /cavities ,even ladies hide, & without the help of body scanners at Airport /Sea port it is tough task for the customs officials to interrogate , have bodily check just on suspicion.Even drugs are hidden in body.

Dec 25, 2013 8:38am IST  --  Report as abuse
jvaishnav47 wrote:
Gold-hungry traders tap Indians living abroad
———————————————-
Nothing wrong, since it amounts to official import by NRIs

What is need of the hour, gold smuggling has become rampant, smugglers hide metal in body /cavities ,even ladies hide, & without the help of body scanners at Airport /Sea port it is tough task for the customs officials to interrogate , have bodily check just on suspicion.Even drugs are hidden in body.

Dec 25, 2013 8:39am IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Literary Giant Dies

Literary Giant Dies

Nobel winner Garcia Marquez, master of magical realism, dies at 87.  Read 

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Full Article | Full Coverage 

Insider Trading

Insider Trading

Ex-Goldman director Gupta starts prison term on June 17.  Full Article 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage