Trace the evolution of India's gold-control policy from the Gold (Control) Act, 1968 to its repeal in 1990, and analyse its impact on smuggling and the informal economy.

The Gold (Control) Act, 1968 restricted the production, manufacture, possession and sale of gold to curb imports and conserve scarce foreign exchange [1]. Its twenty-two-year life shows how a control regime, instead of reducing India's gold demand, largely relocated that demand into an illegal economy.

Evolution of the control regime (1968–1990)

• Statutory framework: The Act (No. 45 of 1968) came into force on 1 September 1968, licensing dealers and goldsmiths and capping private holdings, with the Customs Act, 1962 governing illegal import [1].
• Enforcement architecture: Detection rested on local Customs Houses acting on field intelligence, using manual search methods rather than technology.
• Amendment and tightening through the 1970s extended controls, even as the legal-illegal price gap widened.
• Repeal: The Gold (Control) Repeal Act, 1990 ended the regime on 6 June 1990, amid a foreign-exchange crisis and on the eve of the 1991 liberalisation reforms [2].

Impact on smuggling

• A profitable price gap: With legal gold scarce and duty high, illegal import carried large margins, making the Kerala and Tamil Nadu coasts smuggling corridors.
• Concrete evidence: The 1956 "Kaipad seizure" off Kappad, near Kozhikode, involved gold biscuits worth about Rs 20 lakh; Calicut Customs was still bunding and dewatering a tank at Poyilkavu in 1976 to recover part of it [3].
• Gold's special character — imperishable, odourless and dense — lets contraband simply wait out investigations, keeping enforcement reactive. Coastal interdictions continue today, as with the DRI–Coast Guard seizure of 32.869 kg of gold worth Rs 20.21 crore smuggled from Sri Lanka [4].

Impact on the informal economy

• Revenue and forex leakage, since smuggled gold paid no duty.
• Criminalisation of livelihoods: licensing pushed small goldsmiths and family jewellers into unrecorded work.
• Unaccounted wealth: gold became a preferred store of black money.

The episode confirms that smuggling is first a price problem and only then a policing problem. India's better course lies in moderate duties with demand-side tools like the Gold Monetisation Scheme, whose components were rationalised in 2025 and deserve redesign [5] — channelling household gold into the formal financial system rather than the grey market.