Suddenly, Indian authorities see a spike in undeclared gold being smuggled into the country from places like the Gulf, and even as far away as Hong Kong.

Two Indians were arrested recently for carrying large quantities of undeclared gold from the Gulf.

Indian media also reported that customs officials at Chennai airport had earlier arrested four people in different incidents and confiscated about 15kg of gold valued at about Dh2million (Rs 2.68 crore)

People of Indian origin are allowed to carry upto 10kg of gold provided they pay a duty of Rs300 (about Dh25) for 10grams if it is ornaments and Rs750 (Dh70) for 10gm in case of bars.

A Gulf-based businessman, was arrested by customs officials in an Indian airport when he was found carrying 2.5kg of gold. The gold is valued in India at around Dh474,000.

Speaking to 'Emirates24|7', a senior customs official in Mumbai said the issue is being investigated.

“The rules are very clear. For those purchasing gold valued at over Indian Rs40 lakh (Dh400,000), it is no big deal to pay a few thousands as customs fee. But they refuse to declare the gold as they do not want to reveal the source of income,” said an assistant commissioner at the Commissioner’s office for Customs in Mumbai.

The 47-year-old garment businessman Badrul Munir Ambidatti from Kannur district in Kerala was travelling to Pune.

According to reports quoting customs officials in Pune, the gold is worth Rs63lakh (Dh630,000).

He has been remanded to custody until October 28.

According to officials the incident could have been easily gone undetected if not for suspicious movement by the passenger, who had hidden the gold ornaments in his socks.

Some officials found Ambidatti’s movements suspicious and checked his baggage thoroughly. The accused had hidden gold ornaments in his socks. Police believe there could be more people involved in the racket.

Another Indian businessman, a developer, was arrested in Mumbai airport for carrying gold worth Dh158,000.

Amol Ferreira, was travelling to Mumbai and was arrested as he was trying to leave the airport without declaring the product.

Jewellery traders in the UAE said that the real motive behind the non-declaration of gold imports may not be to avoid paying customs duty.

“It is to basically to hide black money and unofficial sources of income. Today gold is the most preferred form of investment and there are many cases where people from India come to the Gulf to shop for gold and either take it back with them or send it through other trusted passengers,” said an owner of a leading chain of gold and jewellery stores in Dubai.

When asked if it is common for high volume purchases he said, “We are not allowed to sell one kilogram gold bars. Biscuits and ornaments can be purchased for any amount. It is not very common for people to purchase for more than Dh500,000 or one million. At least it has never happened in any of my stores.

Guidelines issued by the Central Board of Excise and Customs in India states that for the purpose of customs clearance of arriving passengers, a two-channel system has been adopted wherein green channel is for passengers not having any dutiable goods and red channel is for passengers having dutiable goods.

“Passengers walking through the green channel with dutiable or prohibited goods are liable to prosecution and penalty and confiscation of goods. One of the businessman was arrested because he was trying to walk through the green channel,” said the customs official.