Business sectors to furnish report on illegal trade

With illicit trade — both from outside and inside the country — causing a financial loss of around R45,000 crore, at least six business sectors including FMCG, auto, liquor, tobacco, electronics/IT and pharma will be submitting a detailed report on this to the consumer affairs ministry soon.

The report will outline the level of illegal trade going on within India, specially in the border states, and its impact on the business and the losses incurred to the central and state governments.

Industry and trade bodies estimate R45,000 crore of illegal trade in 2012 of which electronics, FMCG, alcohol and cigarette account for over 60%.

On its part, the consumer affairs ministry has set up a high-powered committee that will meet the trade and industry bodies beginning mid-November to discuss the issue.

The move is also crucial for a number of foreign retailers who are planning to enter India via the provisions of FDI in single and multi-brand retail announced last month.

In order to find solutions to the interstate trade barriers, the industry has suggested some steps. "There is a need to develop a national level single market by removing all the existing barriers to trade, multiplicity of acts, fiscal policies and marketing arrangements across the country," an industry report released by the consumer affairs ministry said.

Sources said by the end of 2012, from a current estimated sales of 4.5 crore illegal cigarette sticks each day (smuggled), the number will cross 6 crore.

Metros like Mumbai and Delhi alone account for 10% of these illegal sales, sources said.

On consumption of smuggled cigarettes, India is the sixth biggest destination in the world and fourth biggest within Asia for contraband cigarettes, according to a recent report by Euromonitor.

Overall, the government tends to lose around R2,000 crore every year in revenue from the illegal sale of contraband cigarettes as they are smuggled from across the borders into Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal, Orissa, Assam and other north-eastern states, said a recent Assocham study.

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