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Combating Counterfeiting and Smuggling - An Imperative to Accelerate Economic Development

Mar 27, 2018


Products which cause maximum revenue loss to the exchequer:

tobacco products - Rs. 9139 crore, mobile phones - Rs. 6705 crores, alcoholic beverages - Rs. 6309 crore

 

Chennai, 27 March 2018: FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) today organized a seminar on 'Combating Counterfeiting and Smuggling - An Imperative to Accelerate Economic Development'. The participants 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.

 

Dr. K Jayanth Murali, IPS, ADGP Crime Branch CID, Tamil Nadu stated, "The illicit market for fake and smuggled products is one of the biggest challenges faced by Indian industry. In India, the issue of fake currency is also a serious problem as it is lucrative, offering higher returns. India has porous borders with countries like Nepal and Bangladesh which gives smugglers good opportunity to smuggle products into India. China is also posing a serious threat to India on this issue."

 

Thiru R. Srinivasa Naik, Commisioner of Customs, Chennai Customs Zone stated, ���In India, there is a strong demand for cheaper branded products from Toys to Airplane parts. Apart from significant economic loss in terms of revenue, the illicit and smuggling activities affects consumer health and safety, promotes money laundering causing huge loss of reputation to brand owners and our country as whole.���

 

The market for contraband and smuggled goods is thriving in India and is today one of the biggest challenges faced by Indian industry. Industry body, FICCI, has set up a committee named CASCADE, with the participation of leading industries from all sectors of the economy.

 

Mr. P. C. Jha, Advisor, FICCI CASCADE and Former Chairman, Central Board of Excise and Customs, in his address said, "The problem of illicit trade is much more serious than it is commonly perceived. It has a huge adverse impact on the security and economy of the country, revenue of the government, health of the people and also on the environment. There is also no doubt that the illegal money generated through illicit trade in smuggled, counterfeited and pirated goods is a major source to finance such dangerous activities as terrorism, insurgency and other organized crimes."

 

As per FICCI CASCADE report, the total loss to the government on account of illicit markets in just seven manufacturing sectors was Rs. 39,239 crores in 2014. Amongst the various sectors, the maximum revenue loss to the exchequer on account of illicit trade is attributed to tobacco products, estimating a revenue loss of Rs. 9139 crores followed by mobile phones at Rs. 6705 crore and alcoholic beverages at Rs. 6309 crore.

 

The study 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.

 

Tamil Nadu state has traditionally been a hotbed for the smugglers because of factors like its vast coastline. As per reports, a number of seizures of highly smuggled goods such as gold, cigarettes etc. have been carried out in the past few months in the state of Tamil Nadu. The customs, police department and the state enforcement agencies, in the last couple of months, have taken actions in Tamil Nadu against those dealing in smuggled cigarettes and other illegal products. As per the reports, Indonesian cigarettes (Gudang Garam) worth 9 crore were seized in Chennai from the port in the month of February 2018. Apart from the major cities such as Chennai, Coimbatore and Madurai, raids were also carried out in other small towns. 

 

While there is an increase in vigilance by the enforcement agencies, it must be noted that the seizures are only the tip of the iceberg of a much larger and threatening operation in illegal trade in the country. Illicit trade is internationally known to result in increased criminal activities with its trade falling in the hands of criminal organizations including terrorist groups.

 

According to FICCI's recent report, 'Illicit trade: Fueling Terror Financing and Organised Crime', India is the third most affected country by terrorist activities in 2016, with the first and second positions occupied by Iraq and Afghanistan respectively. As per the United Nations Commission on Crime Prevention and Criminal Justice (UNCCPCJ), counterfeiting is the second largest source of income for criminal activities such as terrorism, globally. Terrorist organisations are manufacturing counterfeit goods and smuggling them across borders to finance their crime operations. The report also highlights that the total employment losses globally due to counterfeit and piracy stood at 2 to 2.6 million jobs in 2013 and is expected to rise to 4.2 to 5.4 million jobs in 2022, suggesting an approximate increase of 110 per cent.

 

Mr. Deep Chand, Advisor, FICCI CASCADE and Former Special Commissioner of Police, New Delhi, in his welcome remarks, said "It is time that we, as a nation and as a part of the global economy, call for stern and resolute counterstrike measure against such ill-intentioned activities; starting with greater vigil at the borders to bilateral and multilateral engagements between nations strengthening the enforcement agencies and working towards the removal of ambiguities in the law related to illicit products."

 

Mr. Chand further emphasized on the need for consumers being continuously made aware of the detrimental impact of illicit products. Consumer awareness campaigns that explain how to differentiate a spurious product from a genuine product, to demanding a copy of the bill from the seller, along with the harmful consequences of buying illegal products vis a vis a genuine one, needs to be explicitly conveyed.

 

Other key speakers included Smt. Kavitha Dutt, Co-Chairman, FICCI Tamil Nadu State Council; Thiru. Praveen Kumar Abhinapu, Superintendent of Police, Crime Branch, CID-I, Tamil Nadu; Smt. Nirmala Desikan, Chairman and Managing Trustee, Journalist and Consumer Activist; Mr. Jagannath Ramaswamy, Chief Mentor, Crystal; Mr. K. S. Natarajan, Senior Advocate, Anand, Dasgupta and Sagar Advocates and Mr. Ruban Hobday, Head, FICCI Tamil Nadu State Council.

 

Several steps are being taken by FICCI CASCADE along with the government and other agencies to create large-scale awareness among the most impacted segment of this menace: the consumer. The seminar on 'Combating Counterfeiting and Smuggling - An Imperative to Accelerate Economic Development' has been organised in a series of such events being organised across the country as part of a nation-wide awareness campaign to highlight the issue and focus on the growing menace of illegal trade. The event was attended by more than 150 industry captains, representative from consumer forums, Government officials and other stakeholders in this segment.



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