The activities of counterfeiting and smuggling are presenting a bigger challenge for enforcement authorities and governments globally. Moreover, the perpetrators of illicit trade are becoming increasingly sophisticated, well-connected and funded. Ficci said in a report published on Friday.
The direct link of these activities with terrorists is a cause of concern. According to the United Nations millions of dollars from the trade of illicit tobacco reach to terror outfits such as the Taliban and the Al-Qaeda. In addition to this, visible consequences of illicit trade such as adverse impact on innovation, investment and brand reputation are well-known to most stakeholders.
However, the bigger concern is the manner in which counterfeiting and smuggling is impacting the social fabric of nations. This in turn is weakening their economic processes - an impact that seems too severe to tackle. Euro Monitor International predicts that counterfeiting accounts for around 5-7 percent of world trade estimating to be around $ 600 billion annually.
There have been incessant efforts by global organisations, governments and corporates to check illicit trade. But there seems to be a long way to go in this direction. World Customs Organisation (WCO) estimated that approximately 3 billion pieces of counterfeit and pirated products were seized in 2013. Of these, more than half of the reported goods were illicit pharmaceutical products (2.3 billion pieces), followed by electronic appliances (470 million pieces), other taxable products (95 million) and foodstuff (50 million), amongst other commodities.
For other industries such as tobacco, a significant rise in illicit trade have been reported. It indicated that in 2012 the illicit trade, rose to 40 per cent making tobacco trafficking a serious issue for customs organisations. Smuggling and counterfeiting is now hurdle for growth for almost every sector in India.
The presence of counterfeit specifically being highest in FMCG packaged foods, personal goods, mobile phones, alcoholic beverages, bottled water, pharmaceuticals, etc., causing billions of losses to industry and the government. ASPA estimated the direct and indirect loss to the government from counterfeit goods at Rs 392 billion in 2014 compared to Rs 130 billion in 2012.