‘Combating Counterfeiting and Smuggling – An Imperative to Accelerate Economic Development’
Products which cause maximum revenue loss to the exchequer:
tobacco products – 9139 crore, mobile phones – 6705 crore, alcoholic beverages – 6309 crore
Kolkata, April 20, 2017: FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) today organized a seminar –‘Combating Counterfeiting and Smuggling – An Imperative to Accelerate Economic Development’.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.
Shri Sadhan Pande, Minister in Charge, Consumer Affairs Department, Government of West Bengal, chief guest at the meeting stated that illicit trade was an increasingly growing global concern. In India, the situation is being further aggravated with counterfeit and smuggled products getting into the country through our borders. Lauding the CASCADE campaign against illicit trade practices, the minister invited FICCI for joint publicity campaigns with Consumer Affairs Ministry on TV and Radio to increase awareness on the menace of counterfeiting and smuggling.
The market for contrabandand 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 against smuggling and counterfeiting activities destroying the economy – FICCI-CASCADE, with the participation of all leading industries from all sectors of the economy.
As per FICCI CASCADE report, the total loss to the government on account of illicit markets in just seven manufacturing sectors is Rs 39,239 crores in 2014. Amongst the various sectors, the maximum revenue loss to the exchequer on account of counterfeiting and 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.Considerable differences in tax rates between states open up opportunities for illegal cross-border trade.A perspective of having the right balance between tax revenue targets and consumer interests is therefore imperative. The Goods and Service Tax (GST), will have to take due care to rectify this anomaly in taxation policy and set this imbalance right.
According to FICCI’s recent report – ‘Invisible Enemy – A Threat to Our National Interests’ – focusing on the negative impact of smuggled goods on the Indian economy and businesses, the smugglers are now switching over to cigarettes and fabric/silk yarn as they are low-risk, high-reward goods. As per the report, in the last one year, the Department of Revenue Intelligence (DRI) seizures of smuggled cigarettes has increased by 78% (from Rs. 90.75 crores in 2014-15 to Rs. 162 crore in 2015-16) followed by fabric/silk yarn where the increase is by 73% (from Rs. 24.03 crores in 2014-15 to Rs. 41.78 crore in 2015-16). The seizures of gold have witnessed an increase of 61% (from Rs. 692.35 crore in 2014-15 to Rs. 1119.11 crore in 2015-16), while the DRI seizures of machinery parts and electronic items has seen a decline.
Mr. Deep Chand, Advisor, FICCI CASCADE and Retd. Special Commissioner, Delhi Police said, “It is time that we, as a national and as a part of the global economy, call for stern and resolute counterstrike force against such ill-intentioned activities. Steps such as greater vigil at the borders, bilateral and multilateral engagements between nations, punitive action coupled with the right policy framework that dis-incentivizes this entire activity and consumer awareness campaigns which highlight detrimental impact of illicit products are much needed to combat this menace.”
Other key speakers, included, Mr. M. K. Sharma, Deputy Commissioner of Customs (Port), Kolkata, Mr. Akash Magharia, IPS, Superintendent of Police (Operations), CID, West Bengal, Mr. Debanjan Mandal, Partner, Fox & Mandal, Mr. SiddharthWanchoo, Executive VP, Marketing, ITC Ltd., Mr. Robin Mackenzie, Global Marketing Director, De La Rue and Mr. Gaurav Vutts, Regional Legal Manager, Hindustan Unilever Ltd.
Several steps are being taken by FICCI CASCADE and the government 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 to be 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 such as Smuggling. The event was attended by more than 100 industry captains, representative from consumer forums, Government officials and stakeholders in this segment.