Illicit market in 5 key industries valued at Rs 7.9 lakh cr: Report
The size of illicit trade in the country across five key industries such as FMCG (packaged goods), FMGC (personal and household care), alcohol, tobacco, and textiles and apparel was Rs 7,97,726 crore in 2022-23, according to FICCI CASCADE report titled, ‘Consuming The Illicit: How Changing Factors of Consumption Affect Illegal Markets in 5 Key Industries’. The report was compiled in association with the Thought Arbitrage Research Institute (TARI).
What is most worrisome is that 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 ready-made garments which are taxed at 12-18 per cent, which give illicit players the opportunity to use arbitrage for economic gains.
The illicit trade is undermining legitimate enterprises, 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.
On the occasion, Ravneet Singh Bittu, Minister of State for Food Processing Industries and Minister of State for Railways, emphasised on the need of harsh penalties and cracking down heavily on the nexus of those engaged in illicit trade and activities.
Addressing the tenth edition of FICCI-CASCADE’s - ‘MASCRADE 2024’, Bittu said co-ordination between various enforcement agencies was 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 India’s future together,” he added.
