Plugging counterfeiting can help govt increase tax revenues
With the forthcoming union budget, one of the most critical factors to consider are the losses caused due to counterfeit products and fake products in high-priority and consumer sectors such as Auto, Pharma, FMCG, Electronics among others. According to surveys, the annual losses caused by counterfeit products globally amounts to $ 700 billion. Brands lose up to 20% of market share and companies face roughly 10% losses on revenue and profit due to counterfeit products in India.
“In its Budget Estimates (BE) for 2015-16, the Government of India (GoI) had pegged its fiscal deficit at Rs 5.6 trillion (3.9% of GDP; based on the assumption that nominal GDP for 2015-16 would be Rs 141 trillion). The exchequer needs to increase revenue for the implementation of their activities. Second, they also need to protect consumer interest. Every year Government loses revenue due to counterfeiting, theft and pilferage of central excise duty on various excisable products like Cigarettes and Pan Masala. A FICCI Cascade study 'Invisible Enemy' estimated the size of grey market for seven industry sectors in India - Auto components, Alcohol, Computer hardware, FMCG, Mobile Phones and Tobacco industries. The estimated tax loss to the exchequer was put at a staggering Rs 26190 crore.