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Smuggled Gold: Measured in Sumo Wrestlers

Gold is more than just something to accessorize with your silk sari for your next get-together. In India, gold is used quite literally on a daily basis, for culture, religion, and aesthetics. Every single day, women are found wearing gold head pieces, gold bangles, gold necklaces, gold earrings, and probably gold any-other-jewelry-you-can-think-of. India may not be the richest country on Earth, but you will find gold on somebody by every road, every street vendor and every home. (Fun fact: Indian households hold approximately 950 billion dollars worth of gold. Literally mountains of gold).

India is the world’s main consumer of gold (at 25% of the world’s gold) and main importer of gold (at 800 tonnes per year). To put that in perspective, that’s about the weight of 5,410 sumo wrestlers worth of gold being consumed and 2,700 sumo wrestlers worth of gold being imported. Literally mountains of sumo wrestlers. Unfortunately, being coveted in gold inevitably leads to thievery and smuggling, especially when India attempted to control the surge in demand for gold by hiking up import taxes by almost 15%.

“As gold import duties have risen in an effort to curb domestic demand, the incentive to smuggle gold has risen.”

Recently, 1.5 million dollars of gold were found inventively hidden in a Hong Kong cargo plane at a Chennai airport. By “inventively,” I mean they were hidden in mobile phones. As in plated to the insides of each cellular phone. And if you think that’s impressive, you’ll be blown away by the other creative gold smuggling methods there are. Gold has been melted into tiny seed-shapes and hidden in dates (like the delicious dried-fruit snack). Gold bars have even been ground into grain and mixed into other metals. Gold is being stashed in aircrafts left and right, and regulators admit that they have little to no control over it. “Smugglers are taking great pains in hiding gold. One passenger was caught recently wearing a belt with 1 kg gold buckle. He had plated it with rhodium which ensured even the metal detector does not find it.” said a Directorate of Revenue Intelligence (DRI) official. Just last month, approximately 43,200 pounds of gold were smuggled into India (that’s 140 sumo wrestlers. About half a mountain of sumo wrestlers per month, probably).

The rise in gold smuggling has shocked just about everybody, and Indian Commerce Ministry officials, such as Konal Doshi, have admitted that the exponential increase has led to gold smuggling becoming it’s own industry, and a dangerous one at that. There seems to be no viable solution to this situation, but a few non-viable solutions have been thrown around.

“The move to increase import duty is not working. In India, everyone – even the poorest of the poor – invests in gold. This move can only work if all the smuggled gold is confiscated by the regulators.”

Economist Surjit Bhalla, and just about everybody else, knows that his idea of confiscating every block of gold is impossible, especially when we have gold hidden in cell phone cases and dried fruit. As of now, officials suspect that less than 1% of gold is actually being impounded, so we’re far from our goal. All we can do now is wait, and it seems like that’s as much as India can do as well.

[Image Attribute: Rediff]
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