The Indian exchequer is estimated to have lost ₹58,521 crore in taxes in 2019-20 due to illicit trade in goods in five key industries — mobilephones, household and personal goods, packaged food, tobacco products and alcoholic beverages — according to report released by FICCI on Thursday.
The report estimates the size of illicit market in these sectors at over ₹2.60-lakh crore for the year 2019-20. “The impact of the illicit market of these key industries on the economy is pervasive and significant because of the backward linkages of these industries with other sectors of the economy, resulting in a multiplier effect. Higher the multiplier, higher is its overall effect on the economy,” said the report.
It added that illicit trade leads to an estimated legitimate employment loss of 15.96 lakh, with the combined FMCG industry accounting for about 68.5 per cent of job losses.
“The combined FMCG industry — household and personal goods, and packaged foods — accounts for 3/4th of the total illicit value of goods in these industries.,” it added.
According to the report, the challenges of illicit trade can be tackled by various measures including addressing demand and supply gap of legitimate goods, strengthening the domestic manufacturing sector, rationalisation of tariffs to reduce tax arbitrage, creation of a conducive environment for innovation and better international coordination and cooperation.