Illicit trade happens when goods, services, or commodities are exchanged illegally, bypassing government laws, regulations, or controls. This illegal economy includes various forms of contraband, counterfeiting, piracy, smuggling, tax evasion, money laundering, and other illicit activities.
About FICCI CASCADE: The Fight Against Illicit Trade
Federation of Indian Chambers of Commerce and Industry (FICCI) created an initiative called FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying Economy) on January 18, 2011, to combat the pressing issue of illicit trade in counterfeits, pass-offs, and smuggled goods both nationally and globally.
India’s Illicit Trade Score: A Report Overview
The FICCI CASCADE report titled ‘Hidden Streams: Linkages Between Illicit Markets, Financial Flows, Organised Crime and Terrorism’ reveals that the illicit economy in India has an overall score of 6.3 on a scale of 1-10, higher than the average score of 5 for other 122 countries. This indicates a substantial illegal economy within India.
Implications of Illicit Trade on Indian Economy
In the financial year 2022-23, authorities seized 3.5 tonnes of gold, 18 crore cigarette sticks, 140 metric tonnes of Red Sanders, and 90 tonnes of heroin. India’s low score of 4.3, compared to the average score of 5.2 for 122 countries, implies less involvement of organized crime actors, but significant influence by criminal networks.
The Financial Impact of Illicit Trade in India
India’s economy has suffered due to illicit trade activities. From 2009-2018, India lost an estimated potential revenue of USD 13 billion due to misrepresented imports and exports. Unclaimed value-added tax (VAT) added up to USD 3.4 billion, contributing to the revenue gap.
Terrorism, Crime and Their Economic Impact
Terrorism and crime cost India approximately USD 1170 billion at Purchasing Power Parity (PPP) in 2021, accounting for about 6% of the nation’s GDP. PPP is a metric that compares different countries’ currencies through a “basket of goods” approach, evaluating economic productivity and living standards between countries.
India’s Position in the Global Drug Economy
India’s geographical proximity to major drug-producing regions, including the Golden Triangle (Myanmar, Laos, and Thailand) and the Golden Crescent (Afghanistan, Pakistan, and Iran), has been associated with activities involving the transport and distribution of controlled substances. Illicit drug trade has significantly increased, with 3,172 cases of drug seizures recorded during 2014-2022 compared to 1,257 cases in 2006-2013.
Organised Crime and Its Influence on India’s Illegal Economy
The aggregate score of organized crime actors in India is relatively low at 4.3 (vs. an average benchmark of 5.2 across 122 countries). However, the criminal network wields significant influence, scoring 6, higher than the average score of 5.8. Although there are fewer active criminals, they engage in a wide range of illegal activities, including drug and human trafficking and illegal wildlife trade.
Government Initiatives To Curb Illicit Trade
Various initiatives have been launched to curb illicit trade activities, such as the Terror Funding and Fake Currency (TFFC) Cell, the Narcotic Drugs and Psychotropic Substances Act, (NDPS) 1985, the National Action Plan for Drug Demand Reduction, and the National Fund for Control of Drug Abuse. Other measures include the Prevention of Money-Laundering Act, 2002 (PMLA), PMLA (Amendment) Act, 2012, The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, The Fugitive Economic Offenders Act, 2018, and The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Addressing Illicit Trade: The Role of Law Enforcement
Law enforcement plays a crucial role in managing and mitigating the effects of illicit trade. In an instance, a skilled woman police officer was appointed to manage a district ravaged by narcotics. Reports suggested local politicians and senior police officers were supporting the drug mafia, compounding the situation. After understanding the depth of the crisis, the officer enforced stringent measures to neutralize the situation.