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NEW DELHI(BullionStreet): India's recent tough stands against gold could only increase smuggling in the world's largest consumer, analysts said.
According to India's Directorate of Revenue Intelligence (DRI), an agency that monitors economic offences, the incidence of gold smuggling in the current fiscal year has zoomed at least eight times compared with the corresponding period the previous year.
They added that the increase in import duty on gold has clearly led to a price differential between Indian and international gold, and that, in turn, has led to an increase in smuggling.
Spot gold prices here are as much as 5.7% higher than in Dubai, compared with a difference of 0.1% in 2008. Typically, gold is smuggled into India from Dubai.
They said about 25 percent of gold flowing into India is coming through irregular channels and further tightening of norms would increase that sharply.
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