Illegal imports caused Rs 3.35-lakh cr revenue loss

The Indian economy took a Rs 3.35-lakh crore hit between 2016 and 2018 due to smuggling of cigarettes, electronics, ready-made garments and capital goods into India.

Smuggling in these five key industries led to 48 lakh job losses in these three years, government data obtained by The Federation of Indian Chambers of Commerce and Industry (Ficci) said.

According to data, which studied the impact of smuggling on Indian economy and employment, the capital goods industry suffered the most out of the five, with losses to the tune of Rs 1.53 lakh crore due to illegal import of machinery into India between 2015-16 and 2017-18.

An estimated 19 lakh people lost their jobs in three years due to the smuggling of capital goods. In other words, India could have created 19 lakh more jobs through domestic production of capital goods if the smuggled goods had not made their way into the country.

Data showed that smuggling of tobacco increased from Rs 13,248 crore in 2015-16 to Rs 16,138 crore in 2017-18.

The total revenue loss to the government was close to Rs 44,000 crore. This also included the output loss to manufacturers. Of tobacco products, an estimate of cigarette smuggling showed that illegal imports of cigarettes increased from Rs 7,183 crore in 2015-16 to Rs 7,729 crore in 2016-17 and further to Rs 8,750 crore in 2017-18.

Former Central Board of Indirect Taxes Chairman P C Jha told DH that such large-scale smuggling has also dented the Centre’s tax revenues over a period of time. A study 3-4 years ago suggested that Rs 39,000 crore was lost in import taxes due to illegal imports.

According to a report, the illegal trade has risen steadily in the last few years and now stands at 3.3% of global trade.

“Hence, its existence and operation are broad in scope and large in value, impacting not only the global economy, causing losses to industry, government and society but are also adversely affecting the health and safety of the consumers,” the report titled ‘Invisible Enemy: Impact of Smuggling on Indian Economy and Employment’ released by Ficci said.

In 2011, Ficci set up a body - Committee Against Smuggling and Counterfeiting Activities Destroying Economy – to assess the socio-economy impact of counterfeiting in India.