KATHMANDU: Even with the recent drop in customs fees for gold imports from India, gold is still far more expensive in Nepal than it is in India. During the Union Budget for the fiscal year 2024–2025 on Tuesday, India's Finance Minister, Nirmala Sitharaman, proposed a six percent reduction in customs taxes. The price of gold has consequently decreased recently on the Indian market; some have projected that prices may fall even lower, below INR 70,000.
Former Finance Minister Barsha Man Pun of Nepal increased the country's gold customs duty by five percentage points to twenty percent on May 28. Due to hefty customs fees, gold dealers in Nepal have reported extra expenses of up to NPR 28,000 per tola. Consequently, there is now a greater price difference between gold in Nepal and India—at least Rs 35,000—between the two countries. This significant price disparity has raised questions regarding possible gold smuggling into Nepal from India.
Because of the porous border between India and Nepal, low-value items like sugar, textiles, and seeds have historically been easier to smuggle into the country. Although historically gold has been smuggled into Nepal from China, Dubai, Qatar, and Hong Kong, there are concerns that, in light of recent developments, India may become a new hub for gold smuggling. Dealers fear that the possibility of gold being smuggled into Nepal may increase as a result of India's lowered customs duties.
Mani Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers' Association, emphasized the heightened risk of smuggling due to open borders and a substantial pricing differential. He stated that smuggling of products, including gold and silver, had occurred prior to India's customs tax cut. According to reports, gold and silver smuggling is already underway in Nepal's Terai region.
This week, as the US dollar strengthened and the country's economy grew, gold prices around the world declined. The local gold market in Nepal has also been impacted by this trend; on Sunday, prices for the metal were Rs 146,200 a tola, but on Friday, they dropped to Rs 144,700. In a similar vein, the price of silver dropped from Rs 1,810 a tola on Sunday to Rs 1,730 on Friday.
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