Indian investigating authorities claim that they have unearthed a massive gold smuggling racket, which traverses a little-known cross-border route that encompasses three countries, and several mountain paths. Foreign-marked gold from China enters Tibet, which China claims to own, and then to India’s Ladakh, and involves Chinese nationals, Tibetan sherpas, and Indian smugglers. The officials claim that in one of the cases that was busted recently, more than 1,000 kg of the yellow metal was physically transported on mules over the mountains by a multinational gang. The gold was later sold in markets like Delhi and other north Indian cities.
One can figure out the economics of smuggling via human mules, from Dubai to Delhi. But, at first glance, it does not make sense to use animals (real mules) to lug the heavy metal over mountains at such great risks. On an average, in recent times, the price difference between Dubai and Delhi is Rs 3,500 per 10 grams, or Rs 3,50,000 per kg. The ticket for the human mule, and her or his commission will still leave a decent profit in the hands of the smuggler. What about the China-Tibet-Ladakh-Delhi route? How much money did the Chinese gang make, after paying the intermediaries?
The trick lies in volumes. Smuggling a few dozens or hundreds of kilos across the nasty and dangerous mountains makes no sense. A 1,000 kg, however, does. The total differential amounts to an attractive Rs 35 crore (Rs 3,50,000/kg x 1,000). At the same time, the amount that is illegally transported needs to be between 50 and 100 kg in each trip. This will yield a maximum profit of Rs 1.75-3.5 crore per trip. Even if the Tibetan and Indian intermediaries cost Rs 20-30 lakh, the Chinese gang can make enough money. This seems to be the case as the officials busted the route after they caught a shipment of 100 kg, which alerted them, and led to arrests.
Let us turn the attention to the buyers of this gold, and understand their intentions. Since the gold is smuggled, it can be purchased illegally, in cash, by the city-based Indians. They may do so for several reasons. One, they may get a minor discount, although a differential of Rs 3,500/10 grams, on a retail price of Rs 1,00,000 or so leaves little scope for it. The major reason is that it helps the purchasers to convert black money into white. Through fake documents, they pay in cash, and show it as legitimately-bought gold from legal sources. Fake documents can show legal imports from Dubai-based entities, and the smuggled gold is included in the inventory. The gold can then be sold to third parties.
According to the Enforcement Directorate (ED), which revealed the gang’s work, and detained 10 individuals, “The smuggled gold was delivered to individuals in Delhi who, in turn, used to sell it to various gold jewellers and dealers in Delhi. The payments for the gold were made to the people on the Chinese side through crypto currency.” Crypto is the safest and most untraceable way, which allows to hide the identities of the payers and receivers. The route proved that the Line of Actual Control, or official border between India and China, is quite porous and amenable to smuggling.
Studies have indicated that India is one of the largest consumers of gold, and recipient of smuggled bullion. A recent article highlighted other means of smuggling. These included concealment in toilet soaps where it is “swaddled” in plastic covers, wrapping foils over gold and hiding it in chocolate boxes, dipping clothes and towels in liquid gold, hiding the yellow metal in prosthetic parts like teeth, sewing the gold into hair and garments, hiding it in aircraft cabin walls and toilets, and using human mules who either wear it as jewellery or hide it in body cavities, like ingesting insoluble capsules of gold grains.
Recently, a celebrity, a movie star and a step-daughter of a senior police officer was caught smuggling gold in a crude way. She had strapped gold bars to her thighs, and concealed some in her waist belt. Before she was caught, she had made 30 trips to Dubai in 12 months, but had escaped due to her family’s connections. According to officials, gold was hidden in some cases as thin sheets and rods inside cricket bats’ handles and blades. Coating gold sheets with a thin layer of banknote ink slows smugglers to disguise them as real currency. However, the Government claims that gold smuggling has reduced after it cut the import duty on it to six per cent.
