Illicit trade related to tobacco led to a loss of Rs 9,139 crore to the exchequer, a study released by FICCI on Friday has revealed.
The exchequer also bore losses due to illicit trade of mobile phones at Rs 6,705 crore and alcoholic beverages at Rs 6,309 crore, the FICCI report said.
The study, by FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy), also establishes a relationship between high taxes and availability of illicit products.
“High tax rates tend to exacerbate illicit markets by creating greater demand for cheap and counterfeit substitutes. A significant reason being that high tariffs and taxes create opportunities for those involved in illicit markets to step in and supply ‘reduced’ versions of the original product at lower prices,” said the report, titled ‘Combating Counterfeiting and Smuggling – An Imperative to Accelerate Economic Development for the period 2014-15’.
FICCI has set up CASCADE with the participation of leading industries from all sectors of the economy against the market for contraband and smuggled goods, which has been thriving in India and is emerging as one of the biggest challenge.
Stating Gujarat has traditionally been a hotbed for the smugglers because of factors like a vast coastline and land borders with Pakistan, the report said a number of seizures of highly smuggled goods such as gold, cigarettes have been carried out in the past few months in the state.
“In the last six months, we have made large number of seizures worth more than Rs 5.2 crore of products like watches, mobile accessories, clothing, cigarettes and shoes. Much emphasis is required in seizing huge smuggled cigarettes floating in the market along with other products such as software, automobile parts, pharmaceuticals,” said Ashish Bhatia, Director General of Police, CID (Crime and Railways), Gujarat, during a seminar in Ahmedabad where the report was launched.
The seminar discussed the importance of increased awareness on the hazards of counterfeiting and smuggling, and the need for effective enforcement to enhance India’s economic development.
According to the report, smugglers are now switching over to cigarettes and fabric/silk yarn as they are low-risk, high-profit goods.