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Golds Smuggled in India Declines

The smuggling of gold in India dramatically slowed down due to the upcoming national elections. According to what the industry told Reuters, smugglers are anxious about their shipments because they might get involved in controlling of vote-buying in India. Cash, Bullion, and drugs are usually impounded to settle the issue with vote-buying in the country’s national election.

In exchange for votes, India’s political parties and their supporters offer money of goods to the local citizens. The Election Commission monitors the poll. Also, they put highway checkpoints to look for cash, gold, liquor, and other goods with high-value that are being used to buy votes. The candidates exclude these goods in their expenses because of the limited amount they could spend.

In Mumbai, the Directorate of Revenue Intelligence (DRI) confiscated 107 kg of gold, around 300 million rupees ($4.3 million) worth. Since March 10, the announcement of the current election, it was DRI’s hugest confiscated goods.

When smuggling of gold slowed down, banks in the world’s second-biggest buyer of precious metal increased their gold imports. The boost in gold import authorized them to charge a premium over global prices.

Anantha Padmanabhan, chairman of All India Gem and Jewellery Domestic Council (GJC), said, “Grey market operators don’t want to take the risk during the election period.”

Last year’s election cycle, India’s Election Commission seized $172 million worth in cash, liquor, gold, drugs, and other high-value items. This year, the value doubled up, summing up to $365 million over the last month.

The head of the bullion division at a Mumbai-based private bank stated that smugglers and other grey market operators’ moving of cash and gold from one place to another are almost unobtainable.

Banks to Charge a Premium

This week, dealers charge a premium of $2.50 an ounce over official domestic price. In almost five months, this has been its highest rate.

Election Commission also seizes cash exceeding 50,000 rupees ($722) without any valid documentation.

Padmanabhan of GJC said, “Demand has fallen due to the cash restrictions. We have requested the Election Commission raise the limit.”

In August 2013, the government of India increased the import duty to 10 percent. As a result, gold smuggling stated to surged drastically. Grey market operators smuggled gold from overseas and trade it in cash to avoid duties.



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