Around 22km from Kozhikode, as National Highway 212 snakes its way towards Mysore, it makes a sharp curve.
At first glance, it looks like any other Kerala town, dotted with eateries, apparel showrooms and cellphone vendors. A closer look reveals that both sides of this 600-metre curve are lined with a staggering 100 or more small jewellers, forming a shiny necklace for this gold-hungry state.
Koduvally is reckoned to be one of India's densest jewellery hubs. "The number of gold merchants here is today perhaps more than even in Dubai. The business volumes are no match though," said Kerala legislator P T A Rahim.
Such was Koduvally's clout before the rise of big players that the demand and supply here set national benchmarks. Now the market has lost most of its sheen but the townwhich has a 125-year history in the yellow metal tradehas acquired another dubious distinction.
Besides the legal imports, Koduvally has become a big destination for gold smuggled in through Calicut International Airport. "In the financial year 2013-2014, 70kg of gold was smuggled into the airport as against 12.5kg in the previous corresponding period. Already this year, 32kg of gold have been smuggleddouble the quantity that came in legally," said a source with the Customs department at Calicut airport.
The smugglers are quite creative, sneaking in gold in the form of nail-cutters, knife-handles, bra wires and combs besides bars and biscuits. One carrier even had half a kilogram of gold hooks and was hoping they would pass off as the regular brass variety, the source said.
Reports indicate that some 70% of the gold smuggled into Calicut in the recent past was handled by the "Koduvally mafia". "Koduvally is a centre of gold smugglers and hawala agents and the police are always on vigil," said deputy superintendent of police, Thamarassery, Jaison K Abraham.
So, how did this panchayat of just around 50,000 enter the gold business in the first place?
Locals say that at the turn of the 20th century, wandering traders and goldsmiths catered to their female customers by going door to door. Women in those days hardly ever left the house. "A few Muslims took a radical step and set up shops in Koduvally," said K Surendran, proprietor of Archana Jewellers.
The real retail boom began in the 1970s and was driven by the Gulf, said Surendran, who is also general secretary of the Koduvally Gold & Silver Merchants Association a platform of 85 local retailers. "Plenty of raw material and money began flowing in from the Gulf," he said.
Soon, the town became the fulcrum of all of Malabar's gold trade, so much so that when the market could not make space for fresh entrants, they began spreading to other parts of Kerala. It is now said that Koduvally jewellers have a presence in almost every town of Malabar.
Today, at least 250 families in and around the town are into the business. Another 2,000 families are goldsmiths. Needless to say, the town's economy has a "spine of gold".
Yet, not everything is glittery about Kerala's 'Golden Village'. Rising import dutiesit went up from 2% to 10% between January 2012 and August 2013 fuelled the veritable boom in smuggling, a fact Union commerce & industry minister Nirmala Sitharaman referred to recently.
Surendran explains the economics: The 11% difference in gold rates between India and abroad amounts to Rs 330 per gm or Rs 3.3 lakh a kg. "Invest Rs 28 lakh, smuggle the stuff into India and, in around four hours (the duration of the flight), make a clean Rs 3.3 lakh. Why wouldn't there be smuggling?" he asks.
But locals say their name is being tarnished. "Even those from neighbouring Kunnamangalam and Balussery get dubbed as Koduvally natives because of our gold market," said P K Mohammed of Thangals Jewellery.
Besides the "smugglers' paradise" tag, Koduvally is also battling the dominance of big players such as Kalyan Jewellers, Alappat, the Alukkas groups, Bhima who have shifted the action to Kozhikode.
To fight off the threat, the small jewellers have decided to band together under a new brandKoduvally Gold Merchant (KGM) Gold. They will pool in resources, giving themselves muscle to fight the biggies.
"We have a long tradition to bank on. Like the ornaments of yore, we have decided to link ourselves and form a more glittering jewel," said Surendran.