It was a few months ago that the body of a 26-year-old youth was washed ashore at Kodikkal beach in Kozhikode district. A few months before that, five youths lost their lives on the road near Kondotty in Malappuram when two gangs were chasing after gold. And now there is news of a kidnapping, allegedly related to the smuggling of gold worth Rs 80 crore from abroad, with the whereabouts of the victim unknown, except for a video, apparently released by the smugglers.

Is there a single day passing in Kerala without a gold haul at the airports or a clash between two gangs of smugglers and carriers? Why do people smuggle gold? The economics is quite simple, though the operation is hugely complicated. It is estimated that the annual demand for gold is around 800 metric tonnes, with a whopping 35% of that consumed by the little state of Kerala. And, out of this, around 40% of purchases are not billed at all.

This means that if you smuggle gold instead of importing it, the profit margin is high and there is a grey market waiting for you at the cost of the exchequer. The price of gold in the UAE is nearly 15 percent lower than the price in India, and the import duty is high. So if you smuggle gold, the profit is very high. As per the current rate and the way of smuggling, mostly in multiples of 250 grams, smuggling 1.5 kg of gold would yield a net profit of around Rs 7 lakh. It is said that there are gangs that smuggle around 30 kgs of gold every day, thus running a parallel economy.

There are various ways of smuggling gold, according to insiders in the racket and also officials. The most common means of smuggling is powdered gold converted to capsules concealed in the body of the carrier; although other methods, such as chipping in gold in electric goods, carrying gold in liquid form as a chemical, and even plating gold inside cardboard cartons, are prevalent here. When one mode is frequently caught, they devise another method. Yes, the underworld is strong in R&D as well.

While the masterminds behind the racket often live an affluent life with all kinds of social respectability and philanthropic images, the carriers, or ‘mules’, are typically the ones caught. 

However, in most cases, they cannot be arrested because the gold they carry is worth less than Rs 50 lakh, and according to the law, they cannot be detained, though the gold can be confiscated.

According to a report, in 2018-19, only four tonnes of gold was seized out of an estimated 100-120 tonnes of gold smuggled into the country. DRI officials estimate that they can detect only about 5-10% of the gold that is smuggled into the country.

 Another report by the World Gold Council (WGC) revealed that smuggling of the precious metal in India increased by 33% to reach 160 tonnes in 2022, compared to the pre-Covid period, due to the increase in import duty to 12.5% from 7.5%.

There are several limitations that prevent officials from effectively combating gold smuggling, ranging from manpower constraints to officials going ‘blind’ during customs checks, because of some ‘setting’.

So, why is gold smuggling so attractive? There are several economic factors to consider. Firstly, illegal gold mining is rampant in many places in Africa, as gold mining is legally banned there. 

These illegal miners then smuggle the gold into other countries, from where it eventually reaches India. There is a vast network operating in this field, allegedly with the support of high and mighty individuals, including political figures.

Secondly, large quantities of black money from India are invested in the gold market, which again has some political undertones, according to insider sources. On the other hand, legal gold imports have also been rising, indicating a significant outflow of foreign exchange. Imports were estimated to be worth Rs 3.44 lakh crore in 2021-22, up from Rs 2.54 lakh crore in 2020-21 and Rs 1.99 lakh crore in 2019-20.

Aside from the financial implications, quite often, a share of this money goes into funding nefarious activities, which are not limited to any one country. Young people, including young women, who are looking for easy money, often get trapped and become part of the racket with no escape route. They are called ‘Kuruvi’, or the mule!

In order to prevent such activities, we have to radically change our concept abut money and also we should restrict our obsession with gold.

So, when you proudly display your elegant golden necklace or any other piece of jewelry with an invisible price tag embedded in its design and size, remember that it might have a dark history. 

The bloodstains of someone who lost their life in a smuggling gang war or the shadow of some criminals who mint money going against the interests of a larger society may be embedded in its glitter.

The business behind the glitter of yellow gold is not always as pure as it seems, and there is a global underworld operating behind it. However, not even the tip of the iceberg is visible. Therefore, beware: gold that glitters is not always unadulterated within!