Sudden surge in gold smuggling in Bangladesh has raised strong suspicion that the precious metal is distained for the neighbouring Indian market, customs officials and insiders said.
Indian government raised import duties thrice in 2013 to 10 per cent on gold bullion - up from 2 per cent in January.
Experts and law enforcers suspect a section of smugglers are using Bangladesh as transit to send smuggled gold into the neighbouring country taking advantage of the farmer's geographical location.
Seizure of smuggled gold jumped by 21 times in 2013 compared to that of the previous year of 2012, according to customs intelligence sources.
It has been found that the trend of gold smuggling increased alarmingly from April last year, just one month after the first hike in import duty on gold in India.
After duty hike, gold import through legal channels in India dropped to 32 per cent in the July-September quarter, according to the World Gold Council (WGC).
Usually, demand for gold increases significantly in India during the wedding season, November to January period.
The WGC has noted a 125 per cent rise in third-quarter gold sales in Thailand over the same period the previous year, to more than 35 tonnes. That suggests Indian smugglers may be buying much of their gold there.
From April to December 2013, the customs intelligence seized some 520 kilogram (kg) gold against 25 kg in the corresponding period of 2012.
All of the smuggled gold has been seized from Dhaka and Chittagong airports, a senior customs official said.
He said India is the second largest consumer of world gold market after China.
In Bangladesh, demand for the precious metal is remarkably low compared to that of India.
Local jewellers said there is no formal import of gold in Bangladesh.
"Recycled gold are the main sources of gold supply in Bangladesh," said Dewan Aminul Islam, General Secretary of Bangladesh Jewellers Samity (BJS).
Jewellers also collect a significant volume of gold from expatriate Bangladeshis who bring the metal with their luggage, he added.
Bangladesh Bank (BB) could not be a source of gold supply in the local market in recent times due to irregular auctions, he said adding that the last auction of gold was organised by BB was in 2007-08.
He also suspects the higher customs duty in India as major reason for significant rise in gold smuggling in Bangladesh.
"It is difficult to check the practice as investors can gain 10 per cent profit with the smuggling," he said.
Air passengers can bring 200 grams of gold with them under the existing baggage rules. In the existing customs rules, importers have to pay Tk 150 as duty on per tola of gold.
The customs official said businessmen avoid formal import of gold fearing other tax authorities' scrutiny and for security reasons.
"Some people bring gold bars within the allowable limit," he said.
Annual consumption of gold in India is high due to their culture and religious purpose of the Hindus, he said.
To meet the demand, vested quarters are active in gold smuggling via Bangladesh by avoiding payment of the higher duty in India, he added.
According to Indian media reports, India designed the higher duty to help its economy by reining in the outflow of money through gold buying.
Annual demand for gold in India is about 1000 tonnes.
In Bangladesh, private associations are controlling the gold market and price adjustment. There are no reliable data on gold market.
"It is unfortunate that we have no study on gold price behaviour," said a senior Bangladesh Bank (BB) official.
In 2012, the central bank had initiated a move to conduct survey on 'behaviour of gold prices in Bangladesh'. But the survey could not be launched due to non-cooperation of customs authority, he said.
Responding to the queries, a senior customs official in the intelligence wing said they are planning to launch a study on gold use behaviour in cooperation with other law enforcing agencies and regulators.
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