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India’s illicit market has resulted in loss of 3 million jobs: FICCI

September 22, 2022
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  • The FMCG industry – household and personal goods as well as packaged food – together accounts for 75% of the total value of illegal goods India.
  • The Government of India has suffered a loss of $7 billion due to the counterfeit market in 2019-2020.
  • The illicit market sucks $2.2 trillion from the global economy.

HUL chairman Sanjiv Mehta said Thursday counterfeiting and smuggling of goods should be treated as serious criminal offenses in India. He defended himself at the start of a civil lawsuit against gray imports FICCI Report on India’s illegal market.

“India is an official signatory of the World Trade Organization and civil law action should be taken against gray imports. Even though the quality of packaging has improved and the supply chain is agile again, the dark web is still being used to trade counterfeits. Many illegal products also come from China,” said Mehta, who is also president of the industry association FICCI.

The report entitled
‘Illegal Markets: A Threat to National Interests’ says India’s illegal market, which spans five key industries, has cost India 3 million jobs. The government has suffered a $7 billion loss in 2019-2020 due to the counterfeit market, according to the report, published by the former Vice President of India. Venkaiah Naidu.

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“You can change your friends, but not your neighbors,” Naidu said, referring to illegal imports from China.

Counterfeiting, smuggling and tax evasion, which come under the heading of organized crime, together form gray or illicit markets. According to that World Economic ForumThe global illicit market sucks $2.2 trillion from the world economy and takes over 3% of global GDP.

Size of the illicit market in India

The report puts the size of India’s illegal market at 2.6 lakhcrore. The FMCG industry, household and personal goods, and packaged foods together account for 75% of the total value of illegal goods in India.

The other four industries with the highest number of illicit goods were FMCG packaged food (25%), tobacco products (20%), alcoholic beverages (19.8%) and mobile phones (7.56%).

“The impact on the economy of the illicit market of these industries is significant because these industries are backwards intertwined with other sectors of the economy, resulting in a multiplier effect,” FICCI said.

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The report states that cell phone counterfeiting is declining due to the Make in India campaign. India has also become the second largest mobile phone manufacturing nation in terms of volume, it said.

“The highest product counterfeiting comes from FMCG household and personal goods with products from small and medium-sized businesses more. Although tobacco use has declined, the illicit market remains the same and the loss to the government is greatest as it is the most heavily taxed,” Director Kaushik Dutta said Thought Arbitration Research Institute (TARI).

The report was prepared by TARI for the FICCI Committee against Smuggling and Counterfeiting Activities (CASCADE).

Supply disruptions and illegal trade

Affected by global supply disruptions amid the Covid-19 pandemic, criminals offered multiple opportunities to create illicit markets.

Although alcohol consumption has declined, its share of the illicit market is still 20% due to high regulatory and fiscal barriers.

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“Boost from
Iago Graphic Jago is the need of the hour. Awareness without action is worthless. Consumer centric movement is vital in India now. Counterfeit products will not exist if consumers reject them. Every time an illegal product is bought, the country is cheated out of revenue. Only when real goods are produced will the nation become tax compliant,” he said Anil RajputPresident of FICCI CASCADE.

Jago Grahak Jago (Wake Up Customer) was established in 2005 by the Government of India to raise consumer rights awareness among customers in India.

The report was prepared using the Annual Survey of Industries, LSS Survey, Private Final Consumption Expenditure (PFCE) under the Indian Department of Commerce.

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