Govt faces soaring 163% surge in smuggling-related losses over last decade

The financial impact reached a colossal Rs 58,521 crore (up from Rs 22,230 crore) across five critical industries which included alcoholic beverages, mobile phones, FMCG-household and personal goods, FMCG-packaged foods and tobacco products.

New Delhi: The losses incurred by the central government from smuggling surged by an alarming 163 per cent over the past decade from 2010 to 2020, as per a report.

According to the 2022 FICCI CASCADE study titled ‘Illicit Markets: A Threat to Our National Interests,’ the Government of India has faced an overwhelming tax loss due to smuggling which witnessed a staggering 163 per cent rise, from 2010 to 2020.

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The financial impact reached a colossal Rs 58,521 crore (up from Rs 22,230 crore) across five critical industries which included alcoholic beverages, mobile phones, FMCG-household and personal goods, FMCG-packaged foods and tobacco products.

Meanwhile, FICCI Committee Against Smuggling and Counterfeiting Destroying the Economy (CASCADE) on Saturday intensified its campaign against Illicit trade by launching the #BeACASCADER campaign.

As part of the campaign, an auto rally was organised to engage with people and create awareness on the detrimental consequences of illicit trade. The initiative witnessed over 250 auto rickshaws forming a convoy as they traversed a designated route which commenced from FICCI House at Tansen Marg.

Flagging off the auto rally, Neeraj Singh, Chair, FICCI Young Leaders Forum, UP Chapter, Politician and Social Worker said, “Smuggling and counterfeiting not only hinder economic progress, but also jeopardise the future of our youth, cause job losses and pose health risks.

To achieve our goal of becoming a 5 Trillion dollar economy, and eventually the world’s largest economy, we must stand united and raise awareness against this critical issue. I express my gratitude to FICCI CASCADE for launching this campaign and extend my heartfelt thanks to all my auto driver brothers who have come forward to support this cause.”

Anil Rajput, Chairman, FICCI CASCADE said, “Illicit trade inflicts significant harm on individual industries and has a substantial negative impact on employment generation and economic growth. Illicit trade also poses a dual challenge for the government.

Not only does it result in a loss of legitimate tax revenue, but it also demands additional allocation of resources for enforcement and public health measures.”

“There is now a pressing need to intensify the campaign against smuggling and counterfeiting and highlight their detrimental consequences. The auto rally provides an opportunity to actively involve the Indian citizenry and make them aware of the multifaceted issues and challenges associated with illicit trade,” Rajput added.

The auto rally was meticulously organised and proceeded through Tansen Marg, Mandi House, Barakhamba Road, Outer Circle Connaught Place, Janpath, Tolstoy Marg and Barakhamba Road before culminating at FICCI House.

The convoy of auto rickshaws carried vibrant banners, vividly highlighting the urgent issues associated with illicit trade. Emphasising its severe repercussions, the banners carried messages about how illicit trade contributes to job losses, finances terror activities, fuels crime syndicates and is a health hazard.

Moreover, during the decade from 2010 to 2020, the tax losses incurred by the government from the alcohol industry witnessed an astronomical surge of over 508 per cent, while the increase in tax loss from the FMCG packaged foods industry stood at a substantial 201 per cent and from the tobacco industry the loss was pegged at 113 per cent.

The exponential sales loss suffered by the five industries witnessed a massive 340 per cent surge from Rs 59,046 crore in 2010 to Rs 2,60,094 crore in 2020, underscoring the severity of the illicit trade problem. FMCG packaged foods, in particular, experienced an alarming rise of nearly 600 per cent, resulting in an enormous actual loss of Rs 1,42,284 crore.

Similarly, the FMCG personal goods industry faced a colossal loss of Rs 55,530 crore in 2020, witnessing a significant increase of 270 percent from the Rs 15,035 crore loss in 2010. These exorbitant losses both for the government and the affected industries underscore the urgent need to combat illicit trade and safeguard India’s economic interests.