Heightened Surveillance by CBIC

• The Central Board of Indirect Taxes and Customs (CBIC) has intensified its surveillance on the import of unbranded gold jewellery due to a significant rise in smuggling activities.
• Recent operations have shown a sharp increase in the amount of gold being illegally transported across international borders.

Increased Seizures in FY24

• In fiscal year 2024, a joint operation by CBIC and the Directorate of Revenue Intelligence (DRI) resulted in the seizure of approximately five tonnes (5,000 kg) of gold.
• This marks a 30 percent increase compared to the 3.5 tonnes (3,500 kg) seized in FY23.
• An official with direct knowledge stated, “Seizures of gold jewellery have increased significantly during the last year, and the share of jewellery has become prominent in the total seized gold. We are monitoring all the orders for importing gold consignments.”

Stricter Monitoring and Checks

• Officials have intensified checks on consignments arriving from Southeast Asia, a route commonly used under the Free Trade Agreement (FTA) for legal gold imports.
• There is also a close watch on the international borders with Myanmar, Bangladesh, and Nepal, known as preferred routes for gold smugglers.
• “We are scanning the data of partner law enforcement agencies and keeping an eye on every consignment of gold. This will enable us to check whether they are related to the gold coming through illegal routes,” the official added.

Government Measures to Curb Imports

• Despite these efforts, only 5-10 percent of the total gold smuggled into the country is seized.
• The BJP-led government has implemented measures to curb these imports, including restrictions on selected gold jewellery and goods, which now require a government licence for import.
• These rules do not apply to the duty rate quota under the Comprehensive Economic Partnership Agreement (CEPA) with the UAE.
• Under this agreement, India has implemented a reduced duty rate quota of two percent on gold imports up to 200 tonnes from the UAE.

Addressing the Challenges

• The restrictions aim to tackle the problem of increasing imports from Indonesia.
• Under the India-ASEAN FTA, some gold products are being imported duty-free and then melted and made into jewellery in India.
• This loophole has been exploited, leading to increased scrutiny and tighter regulations.

The CBIC’s enhanced vigilance and the government’s regulatory measures are steps towards curbing gold smuggling and ensuring that imports are conducted legally and transparently.

While challenges remain, the concerted efforts of the CBIC and DRI reflect a strong commitment to addressing this issue.