Mfg sector losses increased 44% due to illicit trade: Study

Seven major manufacturing sectors suffered an estimated loss of Rs 1,05,381 crore during 2013-14 due to illicit trade, according to a FICCI report.
The study on 'Illicit Markets' focused on seven major manufacturing sectors -- auto components, alcoholic beverages, computer hardware, FMCG personal goods, FMCG packaged foods, mobile phones and tobacco.
On account of illicit trade, FICCI-CASCADE report said, the estimated loss to these seven sectors has increased by 44.4 per cent in just two years, from Rs 72,969 crore in 2011-12 to Rs 105,381 crore in 2013-14.
Moreover, the government tax (direct and indirect) losses, increased by almost 50 per cent to Rs 39,239 crore in 2014 from Rs 26,190 crore in 2012, the study found.

Pointing out that the existence of illicit markets is a matter of serious concern for Indian economy, Ficci said: "Despite the existence of requisite laws in India and arrests of suspected criminals by the police, the scale of illicit markets is huge and the criminal networks and illicit markets organisations continue to thrive".
"Clearly, the existing laws and police operations are not resulting in the desired outcome and do not act as a deterrent. This could be due to the low conviction rates in India".

The largest increase in grey market percentages is seen in the alcoholic beverages and mobile phones industries, where losses have risen by 151 per cent and 111 per cent respectively, the report found.

"These numbers establish that despite best efforts undertaken to curb smuggling and counterfeiting, the illicit markets continue to thrive across all industry segments, posing a serious challenge to various stakeholders".
"Industries lose sales revenues, governments lose tax revenues and customers knowingly or unknowingly lose out due to low quality products which could often lead to hazardous health and safety consequences," Ficci said.