NEW DELHI: The coronavirus pandemic has crushed the inflow of gold smuggled into the world’s second-biggest consumer.
Illegal shipments of gold to India are estimated to have slowed to a trickle of about 2 tons a month, and may total about 25 tons this year, according to N. Anantha Padmanaban, the chairman of the All India Gem and Jewellery Domestic Council. That compares with an estimate of as much as 120 tons last year, or about 17% of the nation’s annual demand, according to the World Gold Council.
Illegal shipments have been hit by one of the world’s strictest lockdowns, which was announced in March and halted international flights among other measures. It also resulted in the economy contracting by almost a quarter in the three months through June, slamming overall demand for gold. While restrictions are slowly easing, the country is yet to fully open up its borders as it’s rapidly becoming the global epicenter for virus infections, lagging behind only the U.S.
“There were no flights in the last six months and so there has been a negligible amount of smuggling,” he said. “Whatever is being smuggled is coming from land borders.” That’s pushed the monthly average of smuggled gold caught at Indian airports to a six-year low of 20.6 kilograms in the year started April, according to Bloomberg calculations based on finance ministry data. Smugglers of gold have benefited from record high prices and a 12.5% import tax that India imposes on shipments of the metal.