Govt loses Rs 26,000 cr in taxes to smuggling, counterfeiting

The figure was revealed in a Ficci report on socio-economic impact of smuggling and tax evastion

Smuggling and counterfeiting is estimated to cost the government a whopping Rs 26,190 crore in tax losses annually, a study conducted by industry chamber Ficci said.

The report, part of the campaign on consumer rights, on the socio-economic impact of counterfeiting, smuggling and tax evasion on seven key Indian industry sectors was released today.

The special study brought out by FICCI and Committee Against Smuggling and Counterfeiting Activities Destroying the Economy (CASCADE) added that overall the industry bears an annual sales loss of Rs 1 lakh crore due to these two menaces.

"According to the study the estimated annual tax loss to government is Rs 26,190 crore. The overall estimate of annual sales loss to industry is put at Rs 1,00,000 crore as per the report," the study prepared by Thought Arbitrage Research Institute (TARI) said.

The key sectors which were included in the study were auto components, alcohol, computer hardware, FMCG (personal goods), FMCG (packaged goods), mobile phones and tobacco.

The report is an attempt to estimate the size of the grey market for selected industry sectors in India and projected the economic loss to industry, government and consequent social impact, Ficci said.

"The maximum tax loss on account of smuggled and counterfeit products to government is from the tobacco sector at Rs 6,240 crore followed by FMCG (packaged food) at Rs 5,660 crore and FMCG (personal goods) at Rs 4,646 crore," it added.

The highest loss to industry in terms of revenue is from FMCG (packaged goods) at Rs 20,378 crore (23.4%), FMCG (personal goods) at Rs 15,035 crore (25.9%), auto components at Rs 9,198 crore (29.6%), mobile phones at Rs 9,042 crore (20.8%) and tobacco at Rs 8,965 crore (15.7%), it said.