Gold smuggling to India on the rise: Traders

KATHMANDU, July 9:

Gold smuggling to India is on the rise as the price of yellow metal is cheaper in Nepal than in India.

According to jewelry traders, the recent duty hike in India has made gold price higher in India compared to Nepal. Smugglers are taking advantage of the situation by smuggling gold to India to get Indian Currency (IC), which is being sold at inflated rates in bordering Nepali towns, according to Tej Ratna Shakya, immediate past president of Federation of Nepal Gold and Silver Dealers Associations.

The Indian government raised import duty on gold to 8 percent from 6 percent on June 5 to reduce its current account deficit.
The federation had urged the Nepal Rastra Bank (NRB), the central bank, to raise import duty on gold as soon as India hiked duty on gold.

“The NRB Governor had assured us that he would look into the issue and do the needful. But nothing has been done so far,” Mani Ratna Shakya, president of the federation, told Reuplica. “Growing smuggling of gold to India is creating shortage of gold in the domestic market.”
According to gold traders, gold is being smuggled to India also to get IC. The Indian currency is being sold at as much as Rs 1.68 even though existing exchange rate stands at Rs 1.60.

Tej Ratna said even some gold traders in bordering towns are engaged in gold smuggling.
Meanwhile, a source at the finance ministry said import duty on gold might be reviewed in the upcoming budget.
If customs duty on gold is raised in line with India, the yellow metal will be dearer in the domestic market by around Rs 1,000 per 10 grams. But traders have requested the government to increase the import duty by at least Rs 1,500 per 10 grams to prevent gold smuggling to India.

Source: Republica