New Delhi: The World Gold Council (WGC) speculates that out of India’s total gold import demand in 2014, almost 20 per cent would be served through the grey market.

“The total demand in 2014 is estimated to be between 850-950 tonnes, out of which upwards of 200 tonnes is likely to be served by the grey market,” said Somasundaram PR, managing director (India), World Gold Council on the sidelines of the ‘7th International Gold Summit’ organized by the Associated Chambers of Commerce and Industry of India (Assocham).

He said: “In India, 22,000 tonnes of gold valued at over US $1 trillion is held privately (including households and temples). A range of social, cultural and economic factors ensure that gold remains a preferred asset class across households regardless of supply restrictions.”

It is reported that 30 percent of the smuggled gold is supplied in Mumbai to unscrupulous jewellers, and the rest to different parts of the country. Illegal gold is finding a place in the market because of below average import resulting from the 80:20 schemes and 10 percent import duty. Against the average monthly demand of 80 tonnes of gold, import is presently around 51 tonnes.

As Indian airports have tightened security, restricting the smuggling by the air route, gold is smuggled into the country through the land route via Nepal, Bhutan, Bangladesh and Pakistan. The Mumbai airport customs, which has started a serious crackdown on gold smugglers, has seized around 529 kgs of gold since April this year.