Contraband, fake goods causing a loss of ₹1 lakh crore to industry: Report
Loss to exchequer put at ₹39,239 cr
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.”