Need to instill fear of harsh penalties in minds of perpetrators of illicit trade: Ravneet Singh Bittu, MoS, Food Processing Industries and Railways, GoI

NEW DELHI: Mr Ravneet Singh Bittu, Minister of State for Food Processing Industries & Minister of State for Railways, Govt of India, today emphasized on the need of harsh penalties and cracking down heavily on the nexus of people engaged in illicit trade and activities.

Addressing the 10th edition of FICCI-CASCADE’s - ‘MASCRADE 2024’, Mr Bittu asserted that co-ordination between various enforcement agencies is key to overcome the battle against the nefarious elements ruining our economic growth. “Together, we build resilient economies, fostering global collaboration to combat these threats with robust initiatives. Let’s safeguard Bharat's future together,” he added. He further stated that the opinions and views of FICCI CASCADE’s report will help the government to come down heavily on illicit trade activities.

“Punishment is necessary, and it is important to instill fear in the minds of perpetrators that harsh penalties are in store for them if they engage in illicit trade activities,” Mr Bittu noted.

Rajiv Talwar, Special Secretary to the Govt. of India and Member (Compliance Management), Central Board of Indirect Taxes and Customs (CBIC), said, “CBIC is serving as the fulcrum in the movement against counterfeit goods and smuggling. We have built a technology-driven risk management portal with very wide capabilities that help us predict possible smuggling operations. CBIC field officers are making on an average 60 detections a day with the help of this portal.”

Mr Talwar added that over 3,000 people have been arrested in the last 15 months and foreign products worth Rs 40 crore were seized.

Anil Rajput, Chairman, FICCI CASCADE, said, “Consumers have and will continue to remain the prime focus group for both legal and the illicit players. In today’s technology-dominated landscape, artificial intelligence has assumed great significance and at present we are witnessing the positive impact of this technology on our businesses and society. However, the time is not far when we will find rogue elements entering the fray and creating a challenge that could become an unmitigated disaster for the industry and society alike. Policymaking in the present times is much more attuned to the ground situation on this subject and I must also commend the enforcement agencies for mounting a strong defence against illicit trade.”

“I believe that my mantra called the ‘SECURE’ framework which stands for Surveillance, Enforcement, Capacity Building, United Front against illicit trade, Rigorous Punishment, Entire Ecosystem built on simplicity- when looked at in totality, will provide a 360 degree addressal of the complicated issue of illicit trade and will also add value and significantly strengthen our strategy against this global menace”.

“Illicit trade is a global threat, and we need a collective response, in this regard, the ancient philosophy of “Vasudhaiva Kutumbakam' shows us the way, it encourages people to consider the world as one family, transcending borders and ideologies. We believe this is the path that we need to follow where the world actually becomes borderless and utilizes its collective strength to overcome this challenge of monumental proportions”.

Pranab Kumar Das, Director, Compliance and Facilitation Directorate, World Customs Organization, said, “In addition to the vital role played by the World Customs Organization (WCO) in stimulating the growth of legitimate international trade, its efforts to combat fraudulent activities are also recognized internationally, especially against smuggling and counterfeiting. Enforcement against illicit trade remains a very important area for Customs, as it provides solutions and appropriate responses to disrupt criminal networks.”

Arun Chawla, Director General, Indian Council of Arbitration (ICA) and Former Director General, FICCI and Think Tank Member, FICCI CASCADE said, "To build resilient economies, it is essential to adopt both preventative and proactive measures that integrate international cooperation, technological advancements, and stringent legal frameworks. The focus is on fostering cross-border partnerships to combat these illegal activities, ensuring that economic growth is sustained while simultaneously securing the integrity of global supply chains."

During the event, FICCI CASCADE, in association with the Thought Arbitrage Research Institute (TARI), launched a report ‘Consuming The Illicit: How Changing Factors of Consumption Affect Illegal Markets in 5 Key Industries’ which pegs the size of illicit market in India at Rs 7,97,726 crore in 2022-23.

Considering 5 key industries—FMCG (packaged goods), FMGC (personal and household care), alcohol, tobacco, and textiles & apparel—where illicit trade is undermining legitimate businesses, distorting competition, and significantly eating into government tax revenues, the report attributes the burgeoning size of the illicit market to heightened consumption of high-value branded, luxury, high-end, taxed goods and services, especially among the expanding aspirational middle class, both in rural and urban India.

The illicit market in these five categories has expanded faster in rural India, especially among the growing classes of middle- and lower-income groups. In essence, the menace of counterfeiting and illicit trade seems to have broken new ground since earlier it was more of an upper-income phenomenon, more pronounced in urban reaches of the country.

Therefore, the changing spend pattern—with rising disposable incomes—highlights consumers opting for products which are taxed more, such as products carrying tax rates of 28 per cent in case of beauty and cosmetic products and readymade garments which are taxed at 12-18 per cent, which give illicit players the opportunity to use arbitrage for economic gains.