DRI Busts Major SAFTA Fraud Network in Areca Nut Imports, Revenue Loss Estimated at ₹2,500 Crore
By Suman Munshi, IBG NEWS
New Delhi, August 16, 2026: The Directorate of Revenue Intelligence (DRI) has uncovered a large-scale customs duty evasion network allegedly involved in misrepresenting the origin of areca nuts imported into India, resulting in a potential loss of more than ₹2,500 crore to the government exchequer, according to information released by the authorities.
The investigation, conducted through an intelligence-led operation, has so far resulted in the arrest of nine persons. During searches linked to the case, DRI officials also seized approximately ₹75 lakh in cash and around 160 metric tonnes of areca nuts from a live consignment.
South-East Asian Areca Nuts Passed Off as Bangladeshi
According to the investigation, syndicates were allegedly sourcing areca nuts from Indonesia, Thailand, Malaysia and other South-East Asian countries, but declaring Bangladesh as the country of origin when importing the commodity into India.
The alleged scheme was designed to obtain preferential customs treatment available under the South Asian Free Trade Area (SAFTA) framework.
Normally, imported areca nuts attract a 100% Basic Customs Duty (BCD). However, eligible imports from SAFTA member countries can receive customs-duty exemptions when they satisfy the prescribed Rules of Origin.
DRI intelligence reportedly identified a pattern in which the SAFTA provisions were allegedly being misused on a significant scale by falsely representing South-East Asian consignments as products originating in Bangladesh.
Alleged Rerouting Through Bangladesh
The investigation indicates that the network allegedly moved areca nuts originating in South-East Asia into an Export Processing Zone (EPZ) in Bangladesh before sending them onward to India.
According to the findings cited by DRI, the goods were allegedly repacked and transferred into different containers before being presented as Bangladeshi-origin consignments. The syndicate allegedly arranged documentation, including SAFTA Certificates of Origin, to support the declared origin.
Indian importers allegedly paid substantial commissions for services covering routing, documentation, customs clearance and transportation of the consignments.
Investigators have also detected the alleged use of cash transactions, hawala channels and dummy entities to move and layer proceeds generated from the operation.
Searches in Kolkata and Visakhapatnam
As part of the investigation, DRI teams conducted simultaneous searches at multiple locations associated with importers, Customs Brokers and holders of Importer Exporter Codes (IECs) in Kolkata and Visakhapatnam.
Officials reportedly recovered documents and other evidence that allegedly indicated the South-East Asian origin of consignments declared as Bangladeshi.
The seizure of approximately 160 MT of areca nuts from an active consignment provided investigators with additional material for the ongoing probe.
Customs Broker Licence Suspended
The investigation also identified a Customs Broker firm that allegedly handled the clearance of a substantial portion of the fraudulent consignments under scrutiny.
Following the DRI investigation, the competent authority has suspended the Customs Broker’s licence.
Nine individuals have so far been arrested, while the investigation into the wider network and its financial operations remains underway.
Impact on Domestic Growers and Legitimate Trade
Authorities have highlighted that such alleged fraudulent imports can have consequences beyond customs revenue.
Large quantities of illegally routed areca nuts entering the Indian market can potentially distort domestic prices and affect Indian areca nut growers, while creating an unfair advantage over businesses complying with customs and trade regulations.
The alleged evasion also represents a wider concern for the integrity of India’s trade-control mechanisms and economic security, particularly in regions connected to cross-border commerce.
The DRI operation has disrupted what investigators describe as an organised network allegedly engaged in mis-declaration of country of origin, fraudulent use of SAFTA concessions and large-scale customs duty evasion.
Further investigation is expected to establish the full financial trail, identify additional participants and determine the precise extent of the alleged duty evasion.
— Suman Munshi, IBG NEWS
