Government loses crores to illicit trade of goods and products, claims FICCI study.

Illicit trade related to tobacco led to a loss of Rs 9,139 crore to the exchequer, a study released by FICCI on Friday has revealed.

The exchequer also bore losses due to illicit trade of mobile phones at Rs 6,705 crore and alcoholic beverages at Rs 6,309 crore, the FICCI report said.

The study, by FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy), also establishes a relationship between high taxes and availability of illicit products.

“High tax rates tend to exacerbate illicit markets by creating greater demand for cheap and counterfeit substitutes. A significant reason being that high tariffs and taxes create opportunities for those involved in illicit markets to step in and supply ‘reduced’ versions of the original product at lower prices,” said the report, titled ‘Combating Counterfeiting and Smuggling – An Imperative to Accelerate Economic Development for the period 2014-15’.