Con­tra­band, fake goods caus­ing a loss of ₹1 lakh crore to in­dus­try: Re­port

Loss to ex­che­quer put at ₹39,239 cr

The Hindu Business Line - - NEWS -

Con­tra­band and coun­ter­feit prod­ucts are caus­ing a loss of ₹39,239 crore to the gov­ern­ment and ₹1.05 lakh crore to in­dus­tries, ac­cord­ing to a re­port.

The re­port FICCI’s Com­mit­tee Against Smug­gling and Coun­ter­feit­ing Ac­tiv­i­ties De­stroy­ing the Econ­omy (Cas­cade) said the loss to in­dus­try is more pro­nounced in seven sec­tors such as auto com­po­nents, al­co­holic bev­er­ages, com­puter hard­ware, FMCG, pack­aged goods, to­bacco and mo­bile goods. This is also af­fect­ing job prospects.

The re­port said the ma­jor rea­sons for smug­gling are Cig­a­rettes and cell­phones are among the most smug­gled items

high tar­iff rates, brand con­scious­ness, lack of aware­ness, dif­fi­cult en­force­ment, cheaper al­ter­na­tives and de­mand-sup­ply gap. The il­licit goods trade takes place in var­i­ous forms such as mis-dec­la­ra­tion, un­der­val­u­a­tion or mis-rep­re­sen­ta­tion of end use.

Smug­gling has been a con­cern for the In­dian ad­min­is­tra­tion and in­dus­try, with nar­cotic drugs, gold and cig­a­rettes ac­count­ing for the ma­jor smug­gled goods. As per the Direc­torate of Rev­enue In­tel­li­gence (DRI), the value of gold and cig­a­rettes seized in 2016-17 stood at ₹435 crore and ₹78 crore re­spec­tively.

This rev­enue loss is fur­ther im­pact­ing the wel­fare mea­sures of the gov­ern­ment, the re­port said.

Suresh Chan­dra, Sec­re­tary, Depart­ment of Le­gal Af­fairs, Min­istry of Law and Jus­tice, said in a press state­ment: “Dam­ag­ing im­pact of coun­ter­feit­ing and smug­gling is three­fold. It af­fects pro­duc­ers, con­sumers and gov­ern­ment. While the coun­ter­feit prod­ucts in­crease ex­po­sure to health and safety risks for con­sumers, it has a di­rect im­pact on spend­ing on wel­fare mea­sures such as on health care, ed­u­ca­tion and pub­lic trans­port. Po­lice and other en­force­ment in­fra­struc­ture are also hit by this re­source crunch which ex­ac­er­bates the prob­lem of grey mar­ket op­er­a­tions.”

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