Contraband products in India are causing a loss to the government’s exchequer to the tune of ₹39, 239 crore and loss of ₹1.05 lakh crore to industries, according to a report.

The report by the Federation of Indian Chambers of Commerce & Industry Committee Against Smuggling and Counterfeiting Activities Destroying the Economy (CASCADE) states that the loss to industry is more prominent in seven sectors such as auto components, alcoholic beverages, computer hardware, FMCG, packaged goods, tobacco and mobile goods. This is also affecting job prospects, it said.

The report states that major reasons for smuggling include 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 misuse of end use.

Smuggling has been a point of concern for 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 seizures for gold and cigarettes in the year 2016-17 stood at ₹435 crore and ₹ 78 crore respectively.

This revenue loss is further impacting the welfare measures of the government, the report stated. 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,” he added.

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