What is the Business of Smuggling?

Case breakdown: Movie Duniya

The scene that you saw shows how Amar, the lawyer (played by Dev Anand) is interrogating a person who claims to be a businessman. He says he is into export and import, although he couldn’t answer the goods he is exporting or importing.

What is the Business of Smuggling?

Smuggling is the illegal transportation of goods, people, information, substances, etc. across borders. This business is characterized by high profit and low risk. This organized business violates laws and regulations, as they tend to break rules on every level.

Smuggling can be related to the drug trade, human trafficking, illegal weapon trade, illegal immigration, tax evasion, and many more. Motivation to undertake to smuggle includes earning more money in a short time span. This creates a black money market.

Case breakdown: Movie Gumrah

The scene that you saw shows how Sridevi has been framed for carrying drugs from India to Hong Kong. She is being questioned in regards to the cocaine (drug) which happens to be in her vanity box. Cocaine has been placed in her bag by Rahul (played by Rahul Roy).

Ways to Smuggle

Generally, when carrying drugs or gold across borders they are disguised in some ways. People tend to hide drugs in food, shoes, or even in their bodies. India happens to be a gold smuggling destination. It is estimated that up to one-fourth of the total volume of gold entering India arrives here through illicit trade. India imports around 800-900 tonnes of gold every year while the annual consumption is about 1,000 tonnes. This suggests that up to 200 tonnes of gold are being smuggled into the country.

This yellow metal is illicitly traded in Kerala. Today, the import of gold attracts a customs duty of 12.5 percent (raised last year from 10 percent), a GST of 3 percent, and an additional GST of 5 percent on the making of gold ornaments.

A higher rate of taxes incentivizes the smuggling of metal. Some estimates say there is a profit of Rs 6 lakh on every kg of smuggled gold that’s imported through legal routes. With the price of gold crossing Rs 50,000 for 10 grams, illicit trade becomes all the more profitable.

Consequences of Smuggling:

Smugglers intend to maximize their net profit (difference between expected revenues and expected costs) from smuggling. A parallel or shadow economy is created as a consequence.

This also leads to a lessening of tax revenue for the government. rule of law and trade openness have a negative effect on smuggling. Tariff burden has a positive effect on smuggling.

Strong policies and the active role played by the drug control departments would help in controlling smuggling.

References:

https://www.indiatoday.in/news-analysis/story/what-makes-india-a-gold-smuggling-destination-1700066-2020-07-13

https://www.fccollege.edu.pk/wp-content/uploads/2017/03/Paper-5Smuggling-Around-the-World-An-Empirical-Investigation-of-Causes-and-Indicators-by-Zainab-Wajid-Babar-Aziz-and-Zahid-Iqbal.pdf

Understand the Business of Smuggling with a Video