Travellers to India are being searched for gold ornaments by customs officials at major airports across the country.
An Indian law dating back to the 1960s states that those travelling to India are supposed to pay tax for carrying any gold valued at more than Rs20,000 (Dh1,379).
What’s strange is that a man is allowed to carry 50 per cent less gold in comparison to a female traveller, on his person as jewellery.
Indian airports have been conducting stringent checks on most travellers and asking them to shell out duty for any gold ornaments over the stipulated amount.
Last week two Indian men, including a groom who was on his way to India for his wedding, was stopped at the airport by customs.
“I had to negotiate and argue with them for almost 45 minutes to an hour," said Santosh from Bangalore.
According to Sreedhar MK from Thrissur, popularly known as the gold district in Kerala, an Indian woman on an average wears a gold chain weighing at least 16 to 25 grams.
“With gold prices on the rise, any Indian women will end up paying customs duty at airports in India,” he said.
Today’s value of gold is Dh187.50 for a gram and a 16 gram chain will cost Dh3,000.
India’s Customs and Central Excise Rules 1967 stipulates that a man travelling to India can bring gold ornaments worth Rs 10,000 while a woman is allowed to bring gold worth a maximum of Rs 20,000.
Customs duty will be charged on additional value.
There has also been a reported increase in gold "smuggling" into India.
Earlier this month, customs officials at Chennai in southern India seized three kgs of gold concealed in baby diapers.
The passenger, an Indian resident flying from Paris was arrested following the seizure.
On April 21, customs officials at Ahmedabad airport in Gujarat arrested a Mumbai resident and seized 1.2 kilograms of gold. The passenger was travelling from UAE.
Rising gold prices reopen India smuggling route
In the 1970s and 80s in India, you could not hear a story, see a film or know a gangster that was not burnished by some small (or tall) tale of gold being smuggled from the Middle East.
The economies of scale – heavy duty on gold in India, relatively cheap gold in the Gulf and a maritime route to India that Somali pirates of today would relish - made it an attractive risk.
Then, India liberalised, and smuggling the metal no longer made economic sense.
Circa 2008. Global economic crash leads to major spike in gold prices.
Now, gold seems to be the only asset with any lasting value.
Suddenly, Indian authorities see a spike in undeclared gold being smuggled into the country from places like the Gulf, and even as far away as Hong Kong.
Two Indians were arrested recently for carrying large quantities of undeclared gold from the Gulf.
Indian media also reported that customs officials at Chennai airport had earlier arrested four people in different incidents and confiscated about 15kg of gold valued at about Dh2million (Rs 2.68 crore)
People of Indian origin are allowed to carry upto 10kg of gold provided they pay a duty of Rs300 (about Dh25) for 10grams if it is ornaments and Rs750 (Dh70) for 10gm in case of bars.
A Gulf-based businessman, was arrested by customs officials in an Indian airport when he was found carrying 2.5kg of gold.
The gold is valued in India at around Dh474,000.
Speaking to 'Emirates24|7', a senior customs official in Mumbai said the issue is being investigated.
“The rules are very clear. For those purchasing gold valued at over Indian Rs40 lakh (Dh400,000), it is no big deal to pay a few thousands as customs fee. But they refuse to declare the gold as they do not want to reveal the source of income,” said an assistant commissioner at the Commissioner’s office for Customs in Mumbai.
The 47-year-old garment businessman Badrul Munir Ambidatti from Kannur district in Kerala was travelling to Pune.
According to reports quoting customs officials in Pune, the gold is worth Rs63lakh (Dh630,000).
He has been remanded to custody until October 28.
According to officials the incident could have been easily gone undetected if not for suspicious movement by the passenger, who had hidden the gold ornaments in his socks.
Some officials found Ambidatti’s movements suspicious and checked his baggage thoroughly. The accused had hidden gold ornaments in his socks. Police believe there could be more people involved in the racket.
Another Indian businessman, a developer, was arrested in Mumbai airport for carrying gold worth Dh158,000.
Amol Ferreira, was travelling to Mumbai and was arrested as he was trying to leave the airport without declaring the product.
Jewellery traders in the UAE said that the real motive behind the non-declaration of gold imports may not be to avoid paying customs duty.
“It is to basically to hide black money and unofficial sources of income. Today gold is the most preferred form of investment and there are many cases where people from India come to the Gulf to shop for gold and either take it back with them or send it through other trusted passengers,” said an owner of a leading chain of gold and jewellery stores in Dubai.
When asked if it is common for high volume purchases he said, “We are not allowed to sell one kilogram gold bars. Biscuits and ornaments can be purchased for any amount. It is not very common for people to purchase for more than Dh500,000 or one million. At least it has never happened in any of my stores.
Guidelines issued by the Central Board of Excise and Customs in India states that for the purpose of customs clearance of arriving passengers, a two-channel system has been adopted wherein green channel is for passengers not having any dutiable goods and red channel is for passengers having dutiable goods.
“Passengers walking through the green channel with dutiable or prohibited goods are liable to prosecution and penalty and confiscation of goods. One of the businessman was arrested because he was trying to walk through the green channel,” said the customs official.