DRI marks 74% year-on-year hike in gold seizures

MUMBAI: Last February, the information for which Directorate of Revenue Intelligence (DRI) officials had waited for weeks during their secret pan-India operation against an international gold trafficking syndicate, finally arrived. Officials of Operation Golden Dawn learnt that the foreign-origin gold would be brought illegally into India via the Nepal border. But it was the quantum of the seizure that stunned them.

The agency had kept a close watch as the trafficking syndicate arranged for its Sudanese national carriers to smuggle the gold into India. Accordingly, one group was nabbed at Patna railway station on February 19 last year with 37 kg of gold, while two other groups were caught at Pune and Mumbai railway stations, with 5.6 kg and 38 kg of the yellow metal.

Follow-up searches in Mumbai led to the recovery of an additional 20 kg as well as the sale proceeds of the gold— ₹74 lakh in foreign currency and ₹63 lakh in Indian currency. In all, the DRI arrested 10 members of the syndicate, including carriers, and seized a whopping 101.7 kg foreign-origin gold worth ₹51 crore. In May 2022, the agency had seized another batch of 61.4 kg of gold, valued at ₹32.5 crore, as part of its ‘Operation Golden Tap’ in Delhi.

The huge seizures made under the two pan-India operations in 2022-2023 were not exceptions. The DRI’s overall seizure of smuggled gold across India in 2023 was almost double the figure of the preceding year (see graphic). The rise in seizures was matched by an escalation in the number of DRI operations targeting gold-trafficking syndicates across India. While in 2021-22, the DRI carried out seizures in 160 cases, the corresponding figure in 2022-23 was 275, denoting a rise of around 72 per cent over the preceding year.

DRI officials said that two factors were at play behind the surge. One, the DRI sharpened and widened its operations against bigger illicit gold-trafficking syndicates, eschewing the lure of going after easy but smaller targets. Secondly, over half of the seizures, at 52 per cent, pertained to foreign-origin gold that was being allegedly smuggled through land routes which allows transport of bigger quantities in comparison to the air route. At 29 per cent, the air route was the second-most used route employed in smuggling in gold.

“After the pandemic, the DRI intensified its focus on bigger gold-trafficking syndicates as travel and business restrictions began easing,” said a source. “It executed deep investigations and obtained actionable ground intelligence, which led to the busting of the syndicates. The focus on the bigger syndicates resulted in a bigger haul in 2022-2023. The focus on bigger syndicates is also as per our core mandate and limited resources, especially skeletal manpower.”

India’s gold lust

Gold has been an integral part of Indian life from ancient times. The ancient Roman historian, Pliny the Elder, had dubbed it “the sink of the entire world’s gold”. Even today, there is an insatiable demand for the yellow metal.

To meet the demand, India legally imports large quantities of gold from Switzerland, Bolivia, Peru and the United Arab Emirates (UAE). But the difference in gold prices in India and foreign markets such as the UAE, Bangladesh and Myanmar fuels the smuggling, as the margins are lucrative. “A kilogramme of smuggled gold fetches the syndicates a profit of around ₹7 lakh after deducting expenses like transport and the meagre payment of ₹10,000 per trip to carriers,” said a DRI source.

Key Land Routes

During the pandemic, due to the widespread disruption of air traffic, there was a rise in gold smuggling by land routes (road or rail). Much of the seized gold was from Myanmar and smuggled into India through the Zokhawthar route in Mizoram and the old Tamu-Moreh-Imphal trajectory in Manipur, which goes through a vast expanse of unguarded but difficult terrain.

In 2019-20, the largest originating country / region of smuggled gold was the Middle East, but after that, it has been Myanmar. During 2021-22, of the DRI’s seizure of 833 kg of smuggled gold, about 37 per cent originated from Myanmar while only 20 per cent came from the Middle East and seven per cent from Bangladesh.

“The Covid-19 pandemic was a testing time for the international gold-smuggling syndicates,” said a source. “Unavailability of international flights forced the gold smugglers to explore newer routes, which led to a spike in gold-smuggling into India through its north-eastern land borders, mainly from Myanmar and Bangladesh.” The porosity of the Indo-Myanmar border is allegedly being exploited by such syndicates, while free movement of passengers and vehicles across the international border is used by some to cultivate gold carriers.

Sea Route

The DRI has thwarted several smuggling attempts via the sea route. Sources said that gold transported from Sri Lanka was often shifted to a different set of fishing vessels mid-sea and later taken to the east coast of India.

In a joint operation with the Indian Coast Guard in February 2023, the DRI intercepted a fishing boat, after a chase near the Mandapam coast of Tamil Nadu. The three persons aboard the vessel threw the gold into the sea. With the help of divers from the Coast Guard, the gold weighing 17.74 kg was recovered.

Air Route

A major portion of the gold smuggled by air originated from countries like the UAE, Saudi Arabia, Qatar and Bahrain, with a few instances from countries like Malaysia and Thailand. Cases of the precious metal being smuggled through the air cargo/courier route by concealing it in vehicle engine shafts, rotors of machines, triangle valves and in consignments of used clothes were seen in 2022-23.

Compound concealment

International gold-trafficking syndicates are increasingly smuggling the yellow metal in compound form to escape detection. This method entails converting the gold into either paste or powder with chemicals; the compounded gold is then concealed in carriers’ baggage or on their body, inside shoes or wound over their chest, waist, forearms and legs.

DRI sources said that gold in compound form had an extremely high chance of eluding the usual modes of examination like metal detectors and scanners. The agency is currently working to find a technology-aided solution to track the yellow metal in this form of concealment.