Gold smuggling surges in Kerala as import duty hike boosts profit margins

KOCHI: A sharp spike in import duties has revitalised gold smuggling networks in Kerala, with illicit trade margins now reaching an estimated ₹24 lakh per kilogram. Industry experts warn that the Central Government’s recent decision to hike import duty from 6% to 15% has turned smuggling into a high-stakes, high-reward venture once again.

The economic incentive for smugglers has shifted dramatically. When duties were lowered to 6% in 2024, the profit per kilogram hovered around ₹3 lakh, causing a notable lull in illegal activity. However, with current market prices and the added benefit of GST evasion, syndicates are now eyeing profits of nearly a quarter-crore per kilogram.

Data reveals a direct correlation between tax rates and smuggling volume. In 2022, a peak duty of 18.45% led to record seizures totalling ₹678 crore across Kerala's four international airports. Conversely, during the low-duty period of 2024, seizures plummeted to ₹148 crore. Between 2021 and late 2025, enforcement agencies like Customs and the DRI registered over 2,300 cases, recovering gold with a market value estimated to be significantly higher than official valuations.

Advocate Abdul Nazar, General Secretary of the Kerala Gold and Silver Merchants Association, highlighted that the surge in the parallel market not only facilitates crime but also drains the state exchequer of vital GST revenue. In response to the growing threat, central enforcement agencies have announced a crackdown, citing increased vigilance and intensified screenings at all entry points.