Dubai Gold smugglers are using Indian expatriates in the UAE to evade India’s strict gold import regulations, bringing home tonnes of the prized metal legally and cheaply.
People used as carriers by gold houses range from labourers to mid-level executives heading to India for vacations. They are paid handsomely to carry gold bars weighing up to a kilogram, say insiders.
“I have carried up to two kilos of bars in my shoes, but that was a long time ago. A couple of my friends did it just last month. They carried a kilo each and were paid Rs75,000 (about Dh4,500) for it. Sometimes they even pay for your flights,” Sawwal, a street vendor in Bur Dubai’s Meena Bazaar that houses top jewellery houses.
Much to the chagrin of the authorities in India, no laws were broken because each was carrying a kilogram of gold. This is the permissible limit for passengers of Indian origin or Indian passport holders provided he or she has stayed abroad for at least six months, according to new guidelines by the Indian customs department.
“You can take 10 bars of 100 grams or 20 of 50 grams for that matter. You could easily hide them and get away scot free. A couple of my customers from Delhi do it all the time,” a salesman from a reputed Dubai gold shop said.
Importing gold to India is tightly controlled and attracts up to 10 per cent duty following a record hike by the country’s central bank earlier this year. But the duty, payable in convertible foreign currency, for passengers carrying gold bars is only 6 per cent ad valorem plus 3 per cent tax, says the latest guideline for passengers issued by the Indian customs department.
“You can work out the maths. The profit per kilo is still sizeable. Imagine a flight full of passengers, each carrying a kilo of gold legally. The profit is massive. You don’t need to smuggle gold illegally anymore,” said a manager of a shop that trades in bullion. Recently, 80 passengers on a Dubai-Calicut flight brought 80kg of gold, a Indian newspaper reported this week. Recently an Indian expat was arrested by Sharjah Airport customs trying to smuggle eight 24-carat gold chips weighing 80 grams. The accused was travelling to India and had not declared the gold to the airport authorities.
A back of the envelope calculation based on the price of a one kilo 24-carat gold bar earlier this week in Dubai revealed heady numbers. If you had paid Dh142,223 in the UAE (approximately Rs2.4 million), you would have saved almost Rs600,000 for the same bar in India. Paying duty for each bar would mean an additional Rs210,000 (Dh12,500). So that’s a neat saving of about Rs300,000 even after paying off carriers.