Flying into Kerala, prepare for lengthy airport checks after gold smuggling cases

Since her capture – and those of some of her accomplices – the Indian government has cast its net wide to pull in other offenders – and this time, it’s not confined to charges of trying to smuggle in gold into the country and evade import duties. Nope, this time the charges come up trying to use such gold for possible “anti-national” activities.

And the tightness of the security clearance checks at the country’s airports all stem from this particular case, with Swapna Suresh apparently confirming that there were multiple instances where she brought in gold through diplomatic channels. She and her accomplices were caught over one such consignment, of 30 kilos and with a UAE street value of Dh6 million plus.

“Even with fewer flights landing at India’s airports and less passengers to deal with, the checks on personal belongings is taking longer,” said a passenger who landed at Kochi a week ago. “Customs officials, it seems, aren’t taking any chances with India’s anti-terror investigation agencies now involved.

“Swapna Suresh did bring on some change at Indian airports.”

Sure, she did

It was early this month that the 30-kilogram gold consignment placed in a diplomatic pouch addressed to the UAE consulate was seized by customs – most likely on a tip off – at the Thiruvananthapuram. It then set off a chain of events with Swapna – who was born in the UAE and did her schooling in Abu Dhabi – becoming a fugitive for the better part of a week and then nabbed one late night at a Bengaluru hotel in quite dramatic circumstances.

Along that 700 plus kilometer stretch – from Thiruvananthapuram to Bengaluru – she brought down careers of senior Kerala government bureaucrats, diplomats, politicians and threw the spotlight on India’s messy and volatile relationship with gold.

Laws of the land

Smuggling gold is nothing new as far as India – and Indians – are concerned. The country’s airports have been open sieves through which multiple consignments have flowed through, and only the occasional ones getting picked up.

“There were tip-off related to the Swapna consignment – and only because of that would any customs official dare to lay a hand on a diplomatic package,” said a senior official with Kerala Police. “Swapna and her accomplices have confessed to bringing in more than 100 kilograms using their connections. But is she the only one?

“I don’t think so – after a while the intensity of the checks will reduce. And even when everyone knew the checking was intensified, there were passengers on the repatriation flights still bring in contraband gold. That’s because once they get past customs, the gains are many.”

That hunger for metal

In India, the need for gold is almost elemental, the only asset that can endure (after real estate/land). However much the millennials and Gen-Z might say preferences have changed, they are unlikely to be completely swayed away from gold.

“As long as weddings are defined by the amount of gold on the bride, the fascination with the metal will not change,” said Joy Alukkas, Chairman of the jewellery network that has his name. “Every moment of cheer in Indian culture has some association with gold. The millennials won’t change any of that – only their taste for particular collections will change.”

All of which makes India the second biggest consumer of the metal… and a country with some of the highest import duties and rules on gold.

And yet…

According to Abdulsalam K.P., Executive Director at Malabar Gold & Diamonds, India has the rules… but what’s lacking is the implementation.

“They come with so many loopholes, and that’s where the problems begin and escalate,” he said. “A classic example is that for any other commodity, you need to have e-Way Bills to move goods from one part of India to another. But gold is exempted.

“India has to come up with far stringent ways to regulate movement of gold within the country, and also impose tougher requirements on everyone to have proper sourcing documentation, etc. That’s where the biggest gaps exist. Dubai/UAE has clear rules related to bullion brought into the country… most other nations have. India too needs to raise its game.

“It’s not just about India having 12.5 per cent import duty on gold and a GST (general sales tax) of another 3 per cent. That’s not the only reason why so many people attempt to smuggle gold into the country.”

Will the government get draconian?

For some time now, there was speculation the Modi government would impose tougher scrutiny on gold holdings held by its citizens. It was felt that cracking down on gold holdings would be the next natural progression after the 2016 demonetisation move. But so far, the government has held its hand.

What could happen, and many market watchers are speculating openly, is that the government could bring in requirements that citizens should declare their gold holdings. “With gold, the typical Indian’s reaction is that it’s an ancestral asset that got passed down,” said a consultant. “But I think at some point the government will need far more clarity on the origins. As they did with the buying and selling of property or land, there will be more oversight on gold and jewellery deals.

“With smuggling of gold equated to an anti-national offence, the government would step up its offence.”

Get realistic

India could also do good by updating some of its requirements related to expats bringing gold into the country. Currently, for a female passenger, the permissible limit on jewellery is that it should be valued at between 100,000 rupees to 200,000 rupees, and for man, it’s brought down to 50,000 rupees worth of gold.

“It’s been a long time since these limits turned unrealistic – and at today’s gold rates, of $1,920 an ounce plus, it’s laughable,” said an ex-customs official. “Plus, the Indian rupee has depreciated much since these limits were set in the 80’s.

“The Indian government needs a drastic overhaul of its policy on gold. Just hoping people will be honest is literally passing the buck. The laws need to be updated for the 21st century.”

Otherwise, there will always be a Swapna or two making full use of the available loopholes…. Until they are caught. But others will enter and try to rework the channels.

But caught in all this would be the passengers flying into India, who are now having to spend more time to get through customs.

The former UAE schoolgirl has a lot to answer for.