As pandemic hits air transport, gold traffickers take Myanmar route

As the Covid-19 pandemic hits air transport, gold traffickers have shifted their route from West Asia to Myanmar to bring the yellow metal to India, according to the annual report of the Directorate of Tax Intelligence (DRI ).

The agency, which reports to the finance ministry, seized gold worth around 1,200 crore yen in FY21, more than two-thirds of which came from Myanmar. About 240 kg of gold of Burmese origin was seized. However, DRI detectives believe actual amount smuggled could be several times higher

The agency reported that the number of cases of gold smuggling had increased steadily after economic activity resumed following the easing of foreclosure restrictions, almost in line with the increase in legitimate imports. Data showed that imports jumped to over 2.60 lakh crores in FY21, an increase of 27.62% from FY20. Legitimate imports were also the highest. in six years.

The DRI said the largest amount of gold seized in the last fiscal year came from Myanmar compared to West Asia in 2019-2020. “One factor that has largely contributed to this change has been the disruption of air travel caused by Covid-induced restrictions in major supply points like West Asia and South East Asia,” he said. declared the DRI report.

India and Myanmar share a 1,643 km long border, which stretches along four states: Manipur, Mizoram, Nagaland and Arunachal Pradesh. The agency said the two roads that cross this border – the old Tamu-Moreh-Imphal route to Manipur, which crosses a large expanse of unguarded but inaccessible area, and the Zokhatwar route to Mizoram – are popular from the point of view of view of trade and transit, both legal and illegal.

Smuggling process

Speaking about the entire smuggling process over the past fiscal year, the agency said Imphal was the first stop for smugglers. The gold would then be transported to Guwahati to be aggregated and then distributed to various parts of the country, mainly by road. The report noted that with a surge in economic activity after the foreclosure and pent-up demand for gold led to smuggling.

One of the main reasons for smuggling is also the higher import duty. The fiscal year 22 budget reduced import duties on gold to 7.5 percent from 12.5 percent, but levied an additional agricultural infrastructure development tax of 2.5 percent and a another 10 percent welfare surcharge. The net import duty was 14 percent including GST, up from 16 percent before budget.

Import duty

According to the World Gold Council, the net reduction of 2.19% in import duties from this tax is juxtaposed with a 42% increase in gold prices since July 2019, when the duties were raised for the last time. A 1% drop in import duties on gold can increase consumer demand by three tonnes per year in the long run. The reduction in import duties has increased demand by 7 tonnes per year, he said. While a 14% tariff rate continues to make the gray market attractive, lower tariffs and picking up demand could also boost official imports, he said. .

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