At least 10 out of 13 gold smugglers caught at India's Chennai airport over the past month are from Sri Lanka, the Times of India said.
Smugglers originating from Dubai and Singapore are believed to be routing gold through Sri Lanka to avoid detection as visitors from those destinations are closely watched, the report said.
As a result security has been stepped up in at Trichy, Kochi, Thiruvananthapuram and Bangalore in addition to Chennai airport with instructions to "check carefully the baggage of passengers arriving from Sri Lanka," the report quoted an immigration official as saying.
Both Dubai and Singapore are economic growth hubs where rulers tax people less and they have many economic and trade freedoms.
As a result most goods are easily accessible to people at fair prices.
The report said there was a big gap between Indian gold prices and the rest of the world.
A gap between world and domestic prices of a good can arise due to import restrictions imposed on citiz