Foreign cigarette smugglers run into a rough start in 2023

New Delhi: The new year has opened with a spoiler for the smugglers of foreign cigarettes in India, who otherwise consider this time of the year as the period to cheer.

While the country was busy with people exchanging new year greetings, the team of Vijayawada Customs Preventive Commissionerate was busy seizing a massive consignment of 30 lakh sticks of imported cigarettes of the Paris tobacco company, a European brand, near Narasaraopet town in Guntur District of Andhra Pradesh.

The value of the seized stock in the black market is more than Rs 5 crore. In another recent development, the team of Assam Rifles seized foreign cigarettes worth Rs 41.60 lakhs from the Myanmar border in the Champhai district of Mizoram. Again, on January 5, 4 Lakh cigarette sticks valued at Rs 30 Lakhs were seized by Mumbai Customs Officers at the Chhatrapati Shivaji Maharaj International Airport.

In recent years, the Indian Government has made a concerted attempt to curb the menace of cigarette smuggling, and the three recent seizures are a major win for enforcement agencies.

However, these seizures are only the tip of the iceberg. According to the members of the seizure teams, smuggling in cigarettes particularly picks up during the winter months, as demand is higher and seizure activity becomes challenging because of weather conditions in border regions.

“Cigarettes are an ideal target for smuggling as their demand is always high, pack sizes are small making it easy to conceal them and tax savings for smugglers are huge”, reveals an official without wanting to get named.

This is corroborated by the official data released by the Department of Revenue Intelligence (DRI). As per the DRI Annual Report, during 2021-22, 11 crore cigarette sticks valued at Rs 93 crore were seized. As per the DRI report around half of the seized cigarettes originate from Myanmar as the borders are porous here, followed by UAE at 22 percent and the rest about 31 percent is unknown.

Despite hectic efforts by enforcement agencies, what makes it difficult to control smuggling is the fact that smuggled cigarettes are on average 50 percent cheaper in India and the market size is huge.

As per a FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) report titled Illicit Markets: A Threat to Our National Interests the illicit cigarette market in India was a massive Rs 22,930 crore in 2019-20. As per a report by Euromonitor, presently India is the 4 th largest illicit cigarette market in the world. This thriving market is the cause of many negative impacts on the country ranging from huge employment loss to loss of an astounding amount of tax revenue.

The rampant cigarette smuggling in the country has led to a doubling of tax loss for the government from Rs 6240 crore in 2012 to a massive Rs 13331 crore in 2020, as per the FICCI CASCADE report. Illicit markets pose a real and present danger to the interests of the nation and a multi-pronged approach is needed to tackle this threat.