Dhanteras Gold Buyers Turn To Informal Channels As Import Duty Fuels Smuggling

Nearly three in 10 surveyed consumers planning a gold purchase this Dhanteras say they may buy through informal channels offering lower prices, according to a LocalCircles survey. The finding comes as a higher import duty has widened the price gap between official and smuggled gold, while authorities step up action against illegal supply networks.

Of the respondents to the survey question, 71 per cent said they planned to buy from a jeweller who would provide a proper bill. The remaining 29 per cent said they would use informal channels. The question received 21,651 responses. The survey received more than 42,000 responses from consumers across 312 districts.

Gold purchased without a proper invoice or hallmark can leave buyers with little proof of its purity or the terms of the sale. If a dispute arises, the absence of a bill may also make it harder to establish where the gold was bought and what the seller had promised.

Higher Duty Widens The Price Gap

The government raised the import duty on gold from six per cent to 15 per cent in May. Including the Goods and Services Tax (GST), the overall levy on imported gold is about 18.45 per cent. Smugglers avoid these taxes, allowing illegally imported gold to be sold at a discount to the official price.

The World Gold Council’s third-quarter Gold Demand Trends report estimated unofficial gold inflows at about 50 tonnes in July–September, up from around three tonnes in the same period a year earlier. The report said unofficial inflows had risen more than 1,500 per cent. Official net imports fell 46 per cent to 114.1 tonnes during the quarter.

Gold prices remain high despite a recent correction. The release said 24-carat gold was trading at around Rs 1.40 lakh per 10 grams, below a peak of about Rs 1.78 lakh earlier this year. The price pressure has dampened buying: India’s gold demand fell 29 per cent year on year to 162.5 tonnes in July–September, according to the World Gold Council. Jewellery demand declined 20 per cent, while demand for bars and coins fell 40 per cent.

The difference between the official and informal price may tempt buyers seeking to limit their festive spending. But a lower price may come with risks that are difficult to assess at the time of purchase. Buyers should ask for a detailed invoice and check that the jewellery carries the required hallmark and purity details. The bill should record the item, its weight and the amount paid.

Survey Respondents Call For Action

Consumers surveyed also called for a response to smuggling. Thirty-seven per cent wanted the government to crack down on smuggling networks, while 29 per cent favoured reviewing import duties to discourage illegal trade. Another 17 per cent wanted strict action against sellers of smuggled gold. The question received 20,471 responses.

The government was considering a duty cut from 15 per cent to six per cent, according to the release, but no decision had been announced as of November 4. Past changes suggest duties can affect illegal inflows: the release cited World Gold Council data showing unofficial imports fell close to zero after the duty was reduced in July 2024, following increases in 2013 and 2022.

Meanwhile, enforcement agencies have reported seizures ahead of the festive season. In September, the Directorate of Revenue Intelligence said it had seized 6.61 kg of foreign gold worth Rs 10.36 crore and arrested 11 people in a case involving a courier-based smuggling network. In October, the agency seized more than 7.8 kg of foreign-origin gold brought in from Bangladesh through West Bengal, and separately uncovered a network that moved gold through airports in Ahmedabad and Surat.

For buyers, the immediate concern is whether a bargain is backed by a clear record of the sale and proof of purity. A proper bill gives them evidence to refer to if the gold is misrepresented or a later exchange or resale is disputed. The survey’s findings capture consumers’ stated plans; they do not establish how many will ultimately buy through informal channels.

FAQs

Why may some consumers buy gold through informal channels this Dhanteras?
The LocalCircles survey says lower prices are drawing some planned buyers to informal sellers, amid a wider gap between official and smuggled gold prices.

What are the risks of buying gold without a bill or hallmark?
Buyers may have less proof of the gold’s purity or the terms of sale, making it harder to resolve a dispute.

What did the LocalCircles survey find?
Among respondents to the buying question, 29 per cent said they planned to use informal channels, while 71 per cent planned to buy from a jeweller providing a proper bill.