If you’re a Capital Mind regular, you’ll probably find this repeated the 100th time, when I’ve said if you ban gold imports, they’ll smuggle it in. Now, with the price of gold in India higher than even the duty permits (due to supply issues) NRI’s are bringing in gold for a profit. NRIs are allowed to bring in 1 kg of gold if they’ve lived abroad for six months or more. And they still stand to make a 75K profit if they paid the duty. (Times)
Reports from Kerala said passengers from Dubai have brought more than 1,000kg of gold in the last three weeks. People who pay a duty of Rs 2.7 lakh per kg in Dubai still stand to gain at least Rs 75,000 per kg, owing to the price difference in the two countries. Gold dealers in Kerala say most of this gold goes to jewellery makers in Tamil Nadu and Andhra Pradesh.
And we find out that this gold smuggling has already created big people like Fayaz:
According to customs officials, Mustafa, an NRI businessman based in Dubai, and Fayaz had smuggled 42 kg of gold worth Rs 12 crore during the last two months through the Kochi airport using women carriers
When you make something illegal that which is not harmful, you only benefit the smuggler and the corrupt law enforcer. Everyone else loses.
Can we stop this madness about the current account deficit and try to fix it without these silly gold rules?