‘Smuggling and counterfeiting finance terror, undermine security, slows down economic growth’
Panellists at a seminar on ‘Combating illicit trade: Insights, challenges, and solutions’, in Bengaluru on Tuesday.
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Smuggling and counterfeiting not only finance terror groups, but also undermine global security, posing severe threats to safety and economic growth, said Gunjan Krishna, Commissioner for Industrial Development and Director for Industries and Commerce, Government of Karnataka, here on Tuesday.
“The proliferation of counterfeit products, including pharmaceuticals and consumer goods, endangers public health and safety, with the WHO reporting that one in 10 medicines in low- and middle-income countries is substandard,” she said while speaking at a seminar on ‘Combating illicit trade: Insights, challenges, and solutions’, organised by the FICCI. To combat this scenario, Karnataka was taking various steps, including supporting 43 GI-tagged products, and working closely with law enforcement agencies to combat illicit trade, she said.
“Our commitment to preserving traditional crafts and ensuring access to genuine, quality goods is crucial for safeguarding our economy, health, and security,” said Ms. Krishna.
Volume of illegal trade
According to a FICCI CASCADE report titled ‘Illicit markets: A threat to our national interests’, which examined the impact of illicit trade in five key industries in India — mobile phones, FMCG-household and personal goods, FMCG-packaged foods, tobacco products, and alcoholic beverages — the size of illicit market in these sectors was ₹2,60,094 crore for the year 2019-20, with the FMCG industry — household and personal goods, and packaged foods — together accounting for three-fourth of the total value of illicit goods under these five categories.
Prabha Rao, executive director, South Asian Institute for Strategic Affairs and scholar, Institute for Defence Studies and Analyses, said, “Counterfeiting and smuggling undermine legitimate businesses, government revenues, heritage, and the livelihoods of artisans. To combat these illicit practices, it is crucial to engage the grassroots communities and local leaders, raising awareness about their severe economic, health, and societal impacts.”
She said coloured arecanut being smuggled into India from Sri Lanka, Indonesia, Cambodia, and Malaysia and sold at a much cheaper price had been adversely impacting arecanut growers in the country.
Kotraswamy M., Commissioner, Bengaluru North CGST Commissionerate, suggested governments should form a united front, including a human chain of solidarity and whistleblowers, to effectively combat illegal trade and resolve this global menace.
Karnataka has been facing a wide range of smuggling-related issues, although authorities are making significant strides in uncovering various criminal networks. They have successfully dismantled numerous operations, including inter-State drug rackets, international wildlife trafficking rings, and extensive smuggling operations through airports, trains, roads, waterways, and ports.
Kalyanam Rajesh Rama Rao, Additional Commissioner, Customs, said the department had been trying to control smuggling and illegal trade as a result there has been a decline in the number of Chinese toys, milk bottles, and other items, that are made of material that are carcinogenic, coming to the country. However, he said lack of manpower still remained one of the biggest challenges.
Even actionable intelligence would not help sometimes when enforcement itself becomes tough in certain terrains, observed Gunjan Arya, IPS, Deputy Director, Security, State Intelligence, Bengaluru.
“We found the teakwood smugglers in Chikkamagaluru intelligent enough to escape the police as they knew all interior roads very well,” he said.
Mr. Arya further said certain agents bought PDS rice from BPL card-holders and resold it to rice mills and these mills polished the rice and packed and resold it at higher price in the retail market. “Tough to crack such cases and get enough proof as all involved work as a team. Making illicit country liquor is another example; it is easy to set up and hide this business in a village and nobody talks about it,” he said.
According to Prem Mahadevan, Senior Fellow at The Global Initiative Against Transnational Organised Crime, geography played a crucial role, especially if a country’s trade route is linked to China, in the growth of illegal trade; weak democracies and authoritarian states (Central Asia); domestic conflicts and lack of social mobility fuelled illegal trade.
Top 25 counterfeit countries included seven in Latin America, 12 in Asia, and six in Africa. Illegal trade incidents were high in Afghanistan, India, and Nepal while Pakistan was quite high on fake pharma. In Central Asian countries, governmental involvement in illegal trade was in high order. Also, nearshoring has shortened the global supply chain and helped counterfeiting. Recently, The 2023 Notorious Markets List identified New Delhi, Mumbai, and Bengaluru as notorious markets with counterfeits, fakes and smuggled items, according to Mr. Mahedevan.
P.C. Jha, Adviser, FICCI CASCADE, and former Chairman, Central Board of Indirect Taxes and Customs (CBIC), was of the opinion that in recent years, the country made tremendous gains in advancing its formal economy, moving steadily towards the goal of becoming a developed nation. “However, amidst these advancements, one critical challenge remains largely overlooked: illicit trade. Illicit activities, such as counterfeiting and smuggling pose significant threats to our economic stability and development.”
It needed to be highlighted that tackling and mitigating counterfeiting and smuggling was essential to achieving a $5 trillion Indian economy, he added.
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