As a result, India has become the largest destination for globally smuggled gold, most of which enters during the last three months of the year, from October to December. A major route for smuggled gold into India is through Bangladesh. This gold is trafficked from the Middle East, especially Dubai, entering India via Dhaka and West Bengal.
Related government agencies, bankers, and money exchange traders have said that gold smuggling has a major impact on the country's foreign exchange market balance. According to them, the spread between the dollar's exchange rate in the bank and the kerb market also widens as gold smuggling increases. A portion of the country's kerb market has always depended on India. Illegal dollars from the neighboring country are mainly traded in the kerb market. Then it goes to Dubai via Hundi again. From there, it becomes gold and again enters India through Bangladesh. The recent increase in the dollar exchange rate in the kerb market is suspected to be linked to the smuggling of gold into India and the currency supply from there.
According to discussions with market stakeholders, the dollar rate in the country’s kerb market stabilized after the mass uprising of students and the public on August 5. By the end of August, the highest exchange rate for the dollar in the banking sector was BDT 120. At the same time, the retail market saw the dollar fluctuating between BDT 121 and 122. However, at the beginning of this month, a slight upward trend in the dollar exchange rate was observed in the retail market. As of Monday (October 28), the exchange rate for the dollar at money exchanges in the capital was between BDT 124 and 125. Previously, over the last two weeks, this rate had risen to as high as BDT 126.
A study based on data analysis from India’s Directorate of Revenue Intelligence revealed that the highest amount of gold smuggling occurs from October to December in the three winter months. Researchers from the Bengaluru-based St. Joseph's Institute of Management and Pondicherry University made this observation while studying the impact of gold smuggling on the international market in India. In a research report titled "Gold Smuggling in India and Its Effect on the Bullion Industry," published in March, this observation is supported by members of the Border Guard Bangladesh (BGB) as well.
According to them, the increased fog during winter also prompts smugglers to become more active—additionally, this fog results in reduced gold being seized during smuggling attempts. According to BGB data, from 2020 to 2023, force members seized approximately 594 kg of gold during smuggling attempts in border areas. Nearly 44 percent of this was seized last year. In 2023, 260 kg and 567 grams of gold were seized from border areas during smuggling attempts, including 14 kilograms and 794 grams in October, 27 kg and 400 grams in November, and 11 kg and 643 grams in December.
When asked about this issue, Colonel Mohammad Shariful Islam, BGB spokesperson, told Bonik Barta, "Fog is generally more prevalent in border areas during winter. Smugglers attempt to take advantage of this situation for gold smuggling. Before winter, surveillance in border areas has been intensified to curb gold smuggling. In the future, BGB will maintain a strong stance against gold smuggling through the borders."
However, despite what the BGB may say, the current law and order situation is somewhat weak, allowing gold smugglers to become active again. After a period of silence following the fall of the Hasina government, the smuggling network has fully resumed its activities during the winter season. Dollars are primarily used for gold transactions. Their activities have already impacted the dollar exchange rate in the black market.
Regarding this, a money exchange operator based in Motijheel, Dhaka, stated, "Dollars enter Bangladesh through various channels. The smuggling of gold has consistently shown a significant impact on the balance of the exchange rate in both the banking and black markets."
Gold smuggling also significantly impacts the supply of dollars as remittances in the country's foreign exchange market. A major source of remittances comes from Middle Eastern countries, which are also primary sources of gold smuggled into India. According to law enforcement agencies, a substantial portion of the income earned by expatriates in the Middle East is now entering Bangladesh in the form of gold bars instead of dollars. These gold bars are being legalized at the country’s airports. Despite doubling the customs duties, stopping the influx of gold bars from the Middle East instead of remittances has not been possible. In the last fiscal year, 2023-24, gold bars worth approximately BDT 35 billion were legalized only at Shah Amanat Airport in Chattogram. However, law enforcement officials believe that the amount of gold entering Bangladesh through illegal channels is several times greater than that of legal.
Border districts in the Khulna division, including Jashore, have become major centers for gold smuggling from Bangladesh to India. In Jashore alone, 250 kg of gold has been seized during smuggling attempts over the past four years.
Local law enforcement agencies have reported that during the monsoon season, water accumulates in the border areas of Jashore, which is a significant reason why smugglers choose the dry season for gold smuggling.
Conversations with several border area residents reveal that cattle trading serves as a cover for establishing cow pens. In reality, gold is smuggled into India under this guise using carriers. In exchange, an equivalent amount of dollars or other currencies is illegally brought back into Bangladesh. The amount of gold smuggled through this route is only a fraction of what the BGB or customs intercepts.
When asked about this issue, Lieutenant Colonel Saifullah Siddique, commander of the 49 BGB Jashore Battalion, told Bonik Barta, "BGB members are working to prevent smuggling. Our intelligence team is particularly focused on dismantling the gold smuggling syndicates. During the monsoon season, water accumulates at the Jashore border, so smugglers opt for the dry season for their operations."
Another reason for the increase in gold smuggling from Bangladesh to India is the high tariffs imposed on importing the commodity into India. Stakeholders indicate that many involved in the gold trade are now resorting to smuggling to evade these tariffs. India holds the top position in global gold imports and gold jewelry exports. The black gold market is expanding daily in the country. According to the World Gold Council (WGC), India currently has the largest household gold reserves in the world, with families holding at least 25,000 tons of gold. The demand for gold continues to rise due to weddings, religious festivals, and various family events.
This growing demand has made India the largest destination for global gold smuggling. According to the Directorate of Revenue Intelligence in India, although the demand is high, importing gold legally requires paying significant customs duties. As a result, many gold traders in the country have become involved in smuggling. The largest sources of smuggled gold in India are Bangladesh and Myanmar. So far, 73 percent of the smuggled gold seized in India has come from Bangladesh and Myanmar. Gold smuggled from China enters India via Myanmar, while the most significant corridor for gold smuggled from other sources, including the Middle East and Africa, is now through Bangladesh.
A large amount of gold is smuggled into India annually through the border of Jhenaidah, a district adjacent to Jashore. There have been numerous incidents of violence related to the dominance of this gold smuggling, including murders. Local representatives have also fallen victim to these killings. Most recently, the murder of former MP Anwarul Azim Anar from Jhenaidah-4 in Kolkata last May created significant uproar in both Bangladesh and India. At that time, law enforcement agencies indicated that there was a connection between the murder and the struggle for control over gold smuggling.
Another major route for gold smuggling among border districts is through Chuadanga, where numerous allegations of gold trafficking have also been made. When asked about this, Major Kazi Asif Iqbal, the acting director of the 6 BGB Battalion in Chuadanga, stated, "It is our duty to protect the border. We are diligently carrying out our responsibilities to prevent smuggling."
According to the Bangladesh Jewellers' Samity (BAJUS), approximately BDT 912.5 billion worth of gold is being smuggled out of Bangladesh annually. Masudur Rahman, chairman of the association's price determination and monitoring committee, told Bonik Barta, "We provided this data to the previous government, but they did not accept it. Now I understand why. Those within the previous government who were involved in this smuggling supported it. The policy established by the previous government for gold imports is complex. While allowing legal avenues for gold imports, they also permitted the import of gold through luggage. This dual policy was essentially aimed at encouraging gold smuggling. Through this baggage policy, 54 tons of gold entered the country last year, and later, 80 percent of it was smuggled out. As a result, the price of gold in our country is not aligning with the international market prices."