The Congress and the BJP have alleged the involvement of Chief Minister Pinarayi Vijayan's office.
The case involving the smuggling of 30 kg gold in Kerala will be taken over by the National Investigation Agency, the Union Home Ministry declared on Thursday, saying the "organised smuggling operation may have serious implications for national security". Chief Minister Pinarayi Vijayan wrote to Prime Minister Narendra Modi on Wednesday, seeking a thorough investigation and promising all possible support.
The nod from the home ministry came amid a political firestorm in the state over the case, in which the opposition in the state - the Congress and the BJP -- have alleged the involvement of the Left Chief Minister Pinarayi Vijayan's office.
The gold, concealed in a diplomatic package linked to the United Arab Emirates consulate in the state, was detected by the Customs Department at the Thiruvananthapuram airport last week.
The UAE said it is investigating the case and "the culprits who sought to tarnish the reputation of the UAE mission in India will not be spared".
A former employee at the UAE Consulate, Swapna Suresh, who was also a marketing officer working on contract for one of the firms linked to the Kerala government's Information Technology department, is among those who staked claim to the baggage, said customs sources.
Chief Minister Vijayan has denied that anyone from his office made to attempts to shield any suspect in the case.
"This controversial woman in gold smuggling case has no connection with the Chief Minister's Office or IT department. How can this new gold smuggling case anyway related to state government? The parcel did not come to any of the state government agency. The parcel came for UAE consulate. If there is any failure how can state government be responsible? The state government has no role in it," Mr Vijayan had said.
Sources at the Chief Minister's Office told NDTV that the "contract of the concerned person has been terminated since the serious allegations emerged".
In his letter seeking the Prime Minister's intervention, Mr Vijayan wrote, "The case has serious implications as this undermines the economy of the Nation. In fact, it has more than one angle warranting a thorough investigation".
The woman, who has been designated as a "person of interest" by the customs department, has applied for anticipatory bail, denying any wrongdoing.