Volume of counterfeiting has increased 100 times globally: FICCI

CHENNAI: In the last 20 years, the volume of counterfeiting activity has increased 100 times globally and the size of the trade is 10 % of the legal international trade, accounting for around 2 per cent of the world’s overall economic output, according to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The market for contraband and smuggled goods is thriving in India and is today one of the biggest challenges faced by Indian industry. To study and address this issue, FICCI formed a committee – CASCADE (Committee against Smuggling, counterfeiting activities destroying the economy) which examined the impact of illicit trade in five key industries in India- Mobile phones, FMCG- household and personal goods, FMCG- packaged foods, tobacco and alcoholic products.

“The country is witnessing widespread smuggling in various product categories such as gold, cigarettes, cosmetics, medicines, jewellery, readymade garments, alcohol, capital goods and consumer electronics, which is severely hurting the country’s economy. The problem gets more acute in states like Tamil Nadu owing its vast coastline and Chennai being one of the major significant seaports. Smugglers use these destinations to get products into the country and then distribute in the domestic market,” the report stated.

According to the report, the size of illicit market in the above-mentioned industries was Rs 2,60,094 crore for the year 2019-20, with the FMCG industry — household and personal goods, and packaged foods — together accounting for 3/4th of the total illicit value of goods in five key industries.

The report further estimates that unlawful trade in the five above-mentioned industries results in a total estimated legitimate employment loss of 15.96 lakh. The estimated tax loss to the government due to illicit goods in these industries is Rs 58,521 crore, with two highly regulated and taxed industries, tobacco products, and alcoholic beverages, accounting for nearly 49% of the overall tax loss.

PC Jha, Advisor, FICCI CASCADE and former chairman, Central Board of Indirect Taxes & Customs said, “Illicit trade is a grave concern, it undermines the nation’s economy, damages brand integrity, and most importantly affects health and safety of the citizens which needs to be addressed on an urgent basis. The problem of illicit trade is much more serious than it is commonly perceived,” Jha said.

Tamil Nadu Police’s Additional Director General of Police (ADGP), Crime , Mahesh Kumar Aggarwal who was part of a panel discussion on the issue said that the industry body has been left wanting in addressing the issue.

“The black money generated by this counterfeiting network is used in nefarious activities including terrorism. This parallel economy is not only a threat to our economy, but also our national security,” the ADGP said.

G Ravindranath, Principal Commissioner, Chennai Customs said that this dark economy might as well be the 5th largest economy in the world. The way forward is setting up economic offences and fast track courts and increase penalties. “Fines should be such that they should cause economic injury to those involved,” Ravindranath said.