India's sharp increase in gold import tariffs is fuelling a resurgence in smuggling that could exceed 100 metric tons this year, as soaring grey market margins allow smugglers to undercut banks and refiners of the precious metal, industry officials and bullion dealers said.
India, the world's biggest gold market after China, more than doubled import tariffs to 15% in May to curb demand, cut the trade deficit and ease pressure on the rupee.But the move has created an opportunity for smugglers who are able to offer prices legitimate importers cannot match, they said.
The grey market discount has gone beyond $200 per ounce, or more than 4%, said a Mumbai-based bullion division head at a private gold importing bank, adding that banks were unable to offer even a $10 discount, let alone one of three digits.
He declined to be named because he was not authorised to speak to media.The recent resurgence in the grey market suggests illegal imports could exceed 100 tons in 2026, said another dealer who also declined to be identified because he was not authorised to speak to the media.Four other dealers interviewed by Reuters shared the view that illegal gold imports could exceed 100 tons in 2026.At current prices, 100 tons of gold would be worth about $14.35 billion, implying roughly $2.65 billion in lost tariffs and sales tax.Smugglers can offer steep discounts because they do not pay taxes on gold, including import tariffs and goods and services tax that total 18.45%, the bullion dealers said.
