Gold has long been India’s most coveted commodity, but in recent years its allure has been matched by a troubling surge in illicit trade. Despite the country importing 800–900 tonnes annually and consuming nearly 1,000 tonnes, up to one‑fourth of this demand, nearly 200 tonnes, arrives through smuggling. This shadow economy, worth over $1 billion, deprives the exchequer of at least $20 million in tax revenue and undermines the integrity of India’s financial system.
Smugglers have grown increasingly inventive. Gold is melted into seed‑shaped chips, hidden in chocolate packets, stuffed into dates or capsules, or ground into granules to mimic ore. It has been fashioned into belt buckles, torch batteries, and even concealed within speaker boxes. Customs officers routinely discover gold sewn into garments, hidden in shoes, coats, or speciality belts. False cavities in trolley bags, toys, machine parts, computers, and mobile phones have all served as conduits. In some cases, aviation staff themselves abet the smuggling, exploiting their access to aircraft and cargo.
Recent seizures underscore the scale of the problem. Last week, customs officials at Ahmedabad intercepted 24 foreign‑origin gold biscuits weighing 2.8kg, hidden inside a speaker box on a Dubai–Ahmedabad IndiGo flight. The haul, valued at ₹4.26 crore, was emblematic of the brazen methods employed.
The March 2025 case involving actress Ranya Rao at Kempegowda International Airport brought the issue into sharp focus. DRI officials seized 14.7 kg of gold from her possession, leading to her preventive detention under COFEPOSA for running an active smuggling syndicate. In January 2026, coordinated raids in Delhi and Agartala unearthed a trans‑border network linked to Dubai and Bangladesh, with seizures worth over ₹40 crore.
By March 2026, the DRI intercepted a passenger at New Delhi Railway Station carrying foreign‑marked gold delivered via Kolkata. The operation uncovered 8.2kg of gold, 7.3kg of silver, and over ₹51 lakh in cash, alongside an illegal melting facility in Delhi used to deface foreign markings before resale. Investigations revealed systematic smuggling through rail routes, highlighting the syndicates’ adaptability.
In April 2026, “Operation Dhahabu Blitz” at Mumbai Airport exposed one of the year’s largest rackets. Acting on intelligence, officials stopped 24 women arriving from Nairobi and recovered nearly 30kg of gold concealed in bags and clothing. The women had been trained to evade checks, pointing to a well‑organised syndicate exploiting human carriers.
The Directorate of Revenue Intelligence has repeatedly linked rising import duties and high domestic prices to smuggling. With customs taxes on gold bars and doré now at 15 per cent and 14.35 per cent, respectively, plus GST pushing total levies to 18.45 per cent, smugglers enjoy enormous margins. A one‑kilo bar, small enough to conceal yet worth over ₹25 lakh in duty gaps, becomes a lucrative trade.
Reuters reported that grey‑market discounts have soared beyond $200 an ounce, while banks cannot offer even $10. This disparity incentivises illicit channels. At current prices, 100 tonnes of smuggled gold in 2026 could be worth $14.35 billion, implying $2.65 billion in lost tariffs and taxes.
The 2024 Budget offered a striking policy experiment. Finance Minister Nirmala Sitharaman slashed customs duty on gold and silver from 15 per cent to 6 per cent, the sharpest reduction on record. The effect was that smuggling fell from 156 tonnes in 2023 to 69 tonnes in 2024, and then to just 20 tonnes in 2025.
Gold, alongside oil, is one of the largest contributors to India’s current account deficit. Smuggling exacerbates this burden by distorting official trade figures, undermining tax collection, and fueling grey‑market liquidity. It also strengthens criminal syndicates with transnational links, complicating enforcement and border security.
While airports remain the primary entry points, land routes have grown in importance. The World Gold Council estimates 65–75 per cent of smuggled gold enters by air, 20–25 per cent by sea, and 5–10 per cent by land. While Switzerland remains the largest supplier of legally imported bullion to India, enforcement agencies consistently identify Dubai as the principal source of smuggled gold entering the Indian market. The Bangladesh border appears to be the most porous and offers easy access to Kolkata.
In the northeast, Myanmar’s Khawmawi village near Zokhawthar has become a focal point of cross‑border smuggling, feeding networks that move gold into Mizoram and beyond. These routes complement maritime flows from Dubai and Singapore, with refined bullion and doré bars dominating the illicit trade. Kerala has become a key conduit for gold smuggling, with Thiruvananthapuram, Kochi, and Kozhikode airports ranking among the top three nationwide for seizures.
India has no shortage of gold, with households holding over 30,000 tonnes. Yet smuggling thrives because high duties create arbitrage opportunities, and policy schemes fail to unlock domestic reserves.
The government’s broader efforts to mobilise domestic gold through schemes like the Gold Monetisation Scheme, Sovereign Gold Bonds, and ETFs have largely failed. Only 21 tonnes were mobilised in eight years, a fraction compared to the hundreds smuggled annually. Cultural attachment to physical gold and distrust of financial instruments have blunted these initiatives.
Illegal inflows of gold continue to cause significant tax losses for the government, even as they bolster jewellery exports and domestic supply. With an estimated 150 tonnes of smuggled gold absorbed into the legal market each year, the scale points to organised systems and collusion beyond isolated actors. Via airports, sea and land routes, and by aviation staff, celebrities, influential officials, and organised syndicates, the channels remain varied and persistent.
The writer is a security and economic affairs analyst.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
