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Stringent actions taken by the state have reduced smuggling: Minister for Food and Civil Supplies, Govt of Tamil Nadu

Nov 08, 2022

  • Government Suffers Tax Loss of Rs 58,521 crore due to illicit trade in five key Indian Industries - FICCI CASCADE Report 

  • Products which cause maximum revenue loss to the exchequer: FMCG-packaged foods (Rs 17,074 crore), alcoholic beverages (Rs 15,262 crore) and tobacco products (Rs 13,331 crore) 

  • Illicit market in 5 industries, including mobile phones, FMCG-household and personal goods, FMCG-packaged foods, tobacco products, and alcoholic beverages is valued at Rs 2,60,094 crore

CHENNAI, 08 November 2022: Mr R Sakkarapani, Minister for Food and Civil Supplies, Government of Tamil Nadu today said, "Stringent actions by the state have reduced the smuggling of watches, gold, alcohol and Indian currency, to a considerable extent, but there's a lot that still needs to be done."

Addressing a seminar on 'Preventive Strategies to Combat Counterfeiting and Smuggling', organized by FICCI CASCADE, the Minister suggested to organize such awareness programs in educational institutions to involve the youth in this fight against illicit trade. He further urged FICCI CASCADE to propagate the problem of counterfeiting and smuggling on social media channels, newspaper and other promotional sources in order to make the general public aware of this alarming issue.

Mr PC Jha, Advisor, FICCI CASCADE and Former Chairman, Central Board of Indirect Taxes & Customs said, "Illicit trade is a grave concern, it undermines the nation's economy, damages brand integrity, and most importantly affects health and safety of the citizens which needs to be addressed on an urgent basis." "During the last twenty years, the volume of the counterfeiting activity globally has increased 100 times and the size of trade is 10% of the legal international trade (around 2% of the world's overall economic output). The problem of illicit trade is much more serious than it is commonly perceived."

Mr Deep Chand, Advisor, FICCI CASCADE and Former Special Commissioner of Police, New Delhi, 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. Increasing the rule of law and enhancing effectiveness of penalties and sanctions is important to curb the mounting hazards of Counterfeiting and Smuggling, he added.

Other key speakers included Dr. G S K Velu, Chairman, FICCI Tamil Nadu State Council & CMD, Trivitron / Neuberg Group of Companies, Mr. Bhupesh Nagarajan, Co-Chairman, FICCI Tamil Nadu State Council & CMD, Indira Projects, Mr. Mahesh Kumar Agarwal, Additional Director General of Police, Chennai, Mr. G. Ravindranath, Principal Commissioner, Chennai Customs and Ms. S. Saroja, Executive Director - Consumer Advisory and Outreach Vertical, Citizen Consumer and Civic Action Group (CAG).

The market for contraband and smuggled goods is thriving in India and is today one of the biggest challenges faced by Indian industry. The country is witnessing widespread smuggling in various product categories such as gold, cigarettes, cosmetics, medicines, jewellery, readymade garments, alcohol, capital goods and consumer electronics, which is severely hurting the country's economy. The problem gets more acute in states like Tamil Nadu owing its vast coastline and Chennai being one of the major significant seaports. Smugglers use these destinations to get products into the country and then distribute in the domestic market. 

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. The seminar also deliberated on FICCI CASCADE's recent report titled Illicit Markets: A Threat to Our National Interests, which examines the impact of illicit trade in five key industries in India - Mobile Phones, FMCG-Household and Personal Goods, FMCG-Packaged Foods, Tobacco Products, and Alcoholic Beverages.

Industry body, FICCI, has set up a committee named CASCADE, with the participation of leading industries from all sectors of the economy to raise awareness against this issue and work with Government and other agencies to fight the menace. FICCI CASCADE has recently released a report examining illicit market in 5 Key Indian industries, including mobile phones, FMCG-household and personal goods, FMCG-packaged foods, tobacco products, and alcoholic beverages. According to the report, the size of illicit market in the above-mentioned industries was ₹2,60,094 crore for the year 2019-20, with the FMCG industry - household and personal goods, and packaged foods - together accounting for 3/4th of the total illicit value of goods in five key industries.

The report further estimates that unlawful trade in the five above-mentioned industries results in a total estimated legitimate employment loss of 15.96 lakh. The estimated tax loss to the government due to illicit goods in these industries is Rs 58,521 crore, with two highly regulated and taxed industries, tobacco products, and alcoholic beverages, accounting for nearly 49% of the overall tax loss.

Illicit Market Size

Industry

Value (Rs In Crores)

Mobile Phones

15,884

FMCG - Household & Personal Goods

55,530

FMCG - Packaged Foods

1,42,284

Tobacco Products

22,930

Alcoholic Beverages

23,466


Tax Loss

Industry

Value (Rs In Crores)

Mobile Phones

2,859

FMCG - Household & Personal Goods

9,995

FMCG - Packaged Foods

17,074

Tobacco Products

13,331

Alcoholic Beverages

15,262


 





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. Similar seminars are being organised as part of a nation-wide awareness campaign across the country 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.