Indian expatriates here are increasingly wary of carrying gold home following the tightening of India’s customs rules, especially in the southern part of the country where smuggling has risen and some nationals have landed in jail.

Non-resident Indians (NRIs) traveling to Calicut, Kochi, Chennai and Hyderabad are reluctant to carry gold jewelry and ornaments home for friends.

S. Ratna Kumar from Tamil Nadu, who works for an engineering firm in Jeddah, told Arab News that due to the strict checking on arrival in Chennai, many NRIs are not carrying gold with them.

Mohammed Ashfaque, who works for an IT firm in Alkhobar and hails from Andhra Pradesh, said: “My wife was hassled on arrival in Hyderabad for having some gold ornaments which customs officials insisted attracted duty. I told them that these were ornaments for everyday use. The officials then entered the quantity in her passport and it was checked again (when leaving).”

Mohammed Ashraf from Kerala, who works for a leading construction firm in Riyadh, said several of his friends and relatives are not carrying gold for other nationals.

Indian authorities are fighting a spurt in gold smuggling as higher import tariffs and rising demand have created shortages ahead of the traditional wedding season, when gold purchases in India are at its peak every year. Growing demand for gold has placed India as the world’s largest importer of the precious metal.

Imports have continued to rise, pushing the country’s current account gap to record levels and leaving it vulnerable to capital flight.

In August, the tariff increase caused the gold import market in India to collapse, creating a severe shortage in the legitimate market that made space for smugglers to step in to fill the void. Some smugglers have targeted the Gulf-based NRI community as easy targets to carry out the illegal transportation of gold.

In a rare incident, an Indian expatriate working in the Kingdom was caught by the Indian authorities for smuggling. Abdul Rafeek, 38, from Kerala was found carrying 23 gold bars weighing 2.68 kg, which was found hidden in a juice mixer and torch batteries on Friday.

Indian media reports quoted Varghees Kumar, assistant customs commissioner, as saying that Rafeek had traveled from Riyadh on a Saudi Arabian Airways flight to Karipur in Kerala.

Recently, Raghuram Rajan, governor of the Reserve Bank of India (RBI), admitted that gold smuggling was up “significantly” and there was a need to prevent this from snowballing. Media reports quoted Rajan as saying that after the government and the RBI’s measures to restrict gold imports, smuggling had gone up because there was an incentive to do so.

“Overall smuggling is relatively small at present. That is not to say that it cannot go up. It takes a little bit of time to put the networks together. Small amounts of gold are being smuggled. So hopefully if we create some uncertainty about how long the measures (to curb gold imports) will last, it will prevent significant organized smuggling from taking place.” He said one of the bigger sources of financing for smuggling was through hawala (transfers of cash outside the formal banking system) transactions.