Speaking with The Business Line at Indian newspaper The Hindu, World Gold Council CEO Aram Shishmanian estimated that 150 to 200 metric tons of gold was successfully smuggled into India in 2013, costing the government $1 billion USD in lost taxes. The paper notes over 15 regulatory changes have been made by the government. These measures have ranged from hikes in the import tax, to forbidding banks to make loans for the purpose of importing gold, to the demand that 20% of all imported gold be fashioned into jewelry and reexported for sale.
While the restrictions have led to an explosion of gold smuggling and empowerment of organized crime, it has also led to a substantial decrease in the nation’s current account deficit. (Of course, the money is still leaving the country, but smuggled gold purchases don’t show up on the government’s balance sheet.)
With the reduction in the CAD and pressure building to ease restrictions in what has traditionally been the world’s largest consumer of gold, the Finance Ministry has indicated that it will review gold import policies at the end of the fiscal year, on March 31st.