A surge in smuggled gold is distorting India's bullion market, squeezing legitimate dealers and jewellers by selling at discounts of up to ₹8,000 per 10 grams, said industry executives. The widening price gap follows the increase in gold import duty to 15% from 6% in May, making the grey market increasingly attractive.More than 100 tonnes of gold could enter India through illegal channels this year, according to industry estimates.The development comes even as the Directorate of Revenue Intelligence steps up its crackdown on organised gold smuggling syndicates. In a series of intelligence-led operations across the country, the agency seized more than 27 kg of foreign-origin smuggled gold and arrested 12 people, according to the most recent government data released on July 25."Illegal gold import does not help genuine traders and only helps fly-by-night operators. The current discount on gold is a clear indication that the grey market is active," a senior executive of India Bullion & Jewellers Association said on condition of anonymity.The resurgence also underscores a pattern highlighted by the World Gold Council (WGC): higher import duties tend to widen the arbitrage between Indian and international gold prices, encouraging smuggling.After a 4 percentage point duty increase in early 2013, unofficial gold imports jumped nearly sevenfold to 70 tonnes in the first quarter of 2014 from about 10 tonnes in the first quarter of 2013. Smuggling remained entrenched even after duties stabilised at 10% between late 2013 and mid-2019, averaging about 34 tonnes a quarter, indicating the resilience of established illicit supply networks.Rajesh Rokde, chairman of All India Gem & Jewellery Domestic Council, said, "Illegal entry of gold is hurting the organised trade most. Rather than increasing duty on gold, efforts should be made to increase exports. The government should consider bringing down the duty on gold to 5%."A similar trend emerged after the government raised the effective gold duty to 15% in July 2022 from 10.75%. Unofficial imports rose to about 50 tonnes by the end of the year from 17 tonnes in the second quarter of 2022 and remained elevated through much of 2023.