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Gold Smuggling to Climb in India on Tax Increase, Festivals

The third increase in import taxes on gold this year by India, the world’s biggest user, is set to boost smuggling ahead of the festival and wedding seasons as official imports halt on central bank curbs, a trade group said.

Gold premiums in India have jumped to a record after banks and traders suspended imports since the Reserve Bank of India made it mandatory on July 22 for shippers to set aside 20 percent of shipments for re-export as jewelry and the increase in tariff to 10 percent from 8 percent will further crimp supplies, said Haresh Soni, New Delhi-based chairman of the All India Gems & Jewellery Trade Federation.