India Inc. goes after $5-bn fake, smuggled goods threat

By Gyanendra Kumar Keshri, IANS,

New Delhi : With losses due to counterfeiting, smuggling, tax evasion and branding frauds estimated at $5 billion annually – 20 percent of road accidents in India are estimated due to use of spurious products – India Inc. has asked the government to check the growing menace that hurts consumers and damages brands.


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“Counterfeiting is hurting industry very badly,” said Anil Rajput, chairman of the anti-smuggling and anti-counterfeiting committee of leading industry lobby Federation of Indian Chambers of Commerce and Industry (Ficci).

“These activities are hurting all stakeholders. It is causing huge losses to the government exchequer. It is hurting consumers, their health. It is also damaging the reputation of a whole host of companies that have built their brands over decades,” Rajput told IANS.

“The menace is only growing. If left unchecked it will particularly affect companies in consumer durables, fast moving consumer goods and automobile sectors. Investments are also getting discouraged,” said Rajput, also a senior vice president at ITC.

To give an example, Rajput said studies commissioned by various organisations indicate that 20 percent of road accidents in India are due to spurious products. “A visit to Crawford Market in Mumbai or Palika Bazaar in New Delhi reveals the extent.”

According to a report by think tank Indiaforensic Research Foundation, the total loss to the economy annually due to crimes such as counterfeiting, commercial fraud, smuggling, drug trafficking, bank fraud, tax evasion and graft is estimated at Rs.22,528 crore.

“As India is a major consumption-led economy, counterfeiting is a serious issue to dwell on,” said Parminder Singh, principal policy strategist, Hewlett Packard. “If this issue is not given the attention it deserves, it could have serious ramifications.”

Recently, Ficci also formed a panel called “Ficci-Cascade” that expands into a committee on anti-smuggling and counterfeiting activities destroying the economy. Chaired by Rajput, the committee is working closely with the government to curb this menace.

They have also tied up with Faridabad-based National Institute of Financial Management, an autonomous institution under the finance ministry, to study, monitor and check ways to curb the circulation of black money in the country.

“We are trying to sensitise the consumers as well as the policy makers on these matters because it is doing harm to the entire society,” Rajput said, adding counterfeiting was a $600 billion-a- year problem, only estimated to grow in the coming years.

Smuggling is the other major area of concern.

It is broadly driven by the motives to evade customs duty, to launder ill-gotten funds by means of invoice manipulation, to corner undue export incentives doled out by the government by over-valuing exports and to evade import prohibition.

Rajput said these activities were leading to generation of massive amount of black money that were utilised to fund anti-social activities, including terrorism, illicit trade in arms and ammunition and drug trafficking.

“Our aim is to create awareness, not just among policy-makers, enforcement agencies and government departments but also among consumers and the public in general. Ultimately, the consumers face the maximum risk.”

(Gyanendra Kumar Keshri can be reached at [email protected] and [email protected])

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