Non-resident Indians (NRIs) are bringing gold into the country by taking advantage of rules that allow each individual to carry 1 kg of the metal, helping traders cope with restrictions on imports during the peak wedding season.
India, vying with China to be the top buyer of gold, has choked imports to narrow its trade gap and curb the outflow of dollars. The measures included raising the import duty to a record 10 percent and making it mandatory to export as jewellery 20 percent of all gold imports.
But non-residents who have stayed abroad for more than six months can bring in gold on payment of the import duty, irrespective of end use. Such is the demand that some traders are paying passengers' air fares if they agree to carry gold.
About 80 kg of gold was brought in by non-resident Indians (NRIs) this month on a flight from Dubai to Calicut in the southern state of Kerala, said an airport official who did not want to be identified.
Travel agents typically book about 20-30 tickets on a flight on behalf of NRIs, who are accompanied by people working for traders, said Bachhraj Bamalwa, director of the All India Gems and Jewellery Trade Federation, an umbrella body of more than 300,000 jewellers.
"These NRIs pay the duty, so there is nothing illegal about it," Bamalwa said. "These people are mainly labourers from Tamil Nadu or Kerala, who are given a free ticket."
Government officials estimate NRIs have imported a tonne of gold since mid-November, compared to nearly nothing in previous months. That's a boon for jewellers, many of which have been operating at half capacity due to a lack of stock.
Official gold imports fell to about 21 tonnes in November, less than half the monthly requirement, data from metals consultancy Thomson Reuters GFMS showed.
Gold premiums in India rose to a record $160 per ounce on London prices earlier in December.
Gold-hungry traders tap NRIs to cater to humongous demand
Snapping its two-day losing streak, gold rebounded by Rs 255 to Rs 30,755 per ten grams in the national capital on Monday on low level buying by stockists and retailers for the ongoing marriage season.
However, silver remained under selling pressure for the sixth straight session and shed Rs 30 to Rs 43,470 per kg. It had lost Rs 1,575 in the previous five sessions.
Traders said low level buying by stockists and retailers for the ongoing marriage season led the recovery in gold prices.
They said silver remained under selling pressure against reduced offtake by industrial units and surrendered fresh ground.
On the domestic front, gold of 99.9 and 99.5 per cent purity rebounded by Rs 255 each to Rs 30,755 and Rs 30,555 per ten grams, respectively. It had lost Rs 750 in last two days.
Sovereign rose by Rs 100 to Rs 25,200 per piece of eight gram.
On the other hand, silver ready continued to slide by Rs 30 to Rs 43,470 per kg and weekly-based delivery by the same margin to Rs 44,020 per kg.
Silver coins held steady at Rs 82,000 for buying and Rs 83,000 for selling of 100 pieces.
