Smuggling poses serious threat to legitimate industries and erodes investor confidence: A’bad Customs Chief

• As India’s economy grows, so does the attraction for smugglers; agencies acting decisively to stop this threat
• Cost arbitrage created by high indirect taxes needs to be addressed
• Recent seizures by Ahmedabad Customs include 8 million counterfeit cigarettes, psychotropic substances, and luxury watches—total value exceeding ₹163 crore

 AHMEDABAD, 30 June 2025: Mr Pranesh Pathak, Chief Commissioner of Customs, Ahmedabad Zone, while addressing FICCI CASCADE’s seminar on ‘Illicit Trade in Focus: State – Level Action Against Counterfeiting & Smuggling’ said, “As India’s economy expands and global trade accelerates, the country has become increasingly attractive to sophisticated smuggling networks. From gold, liquor, and narcotics to cigarettes and high-end luxury watches, there is a surge in attempts to illegally move goods across our borders.

These activities not only evade duties but also pose serious threats to national security, public health, and legitimate commerce. In one recent example, Godhra Customs intercepted over 8 million counterfeit cigarettes and seized psychotropic substances valued at over ₹150 crore. Additionally, luxury watches worth ₹13 crore were also confiscated. These seizures are a stark reminder of the evolving strategies and boldness of illicit trade networks targeting our economy.”

“Indian Customs has significantly intensified its vigilance and enforcement operations across land, air, and sea routes. We remain fully committed to protecting our borders, curbing illicit trade, and ensuring that economic progress is not undermined by illicit trade and smuggling. I commend FICCI CASCADE for organising this seminar, which will surely increase public awareness about the issue and encourage various stakeholders to keep on acting decisively,” added Mr Pathak.

Mr Neeraj Kumar Badgujar, Additional Commissioner of Police, Ahmedabad City, Gujarat, said, “Illicit trade not only fuels criminal networks but also compromises public safety and economic stability. Law enforcement must stay ahead through intelligence-led policing, inter-agency collaboration, and community engagement. Public awareness is a powerful tool in our collective fight against smuggling and counterfeiting.”

Mr P C Jha, Advisor, FICCI CASCADE and Former Chairman, Central Board of Indirect Taxes and Customs (CBIC) said, “Smuggling thrives on cost arbitrage created by high indirect taxes and regulatory gaps. When duties on products like tobacco, liquor, and gold are significantly high, it creates strong incentives for illegal trade, undermining legitimate businesses and eroding government revenues. The disparity between legal and illegal market pricing not only distorts fair competition but also exposes citizens to spurious goods, which can become a grave public health issue. Tackling this issue requires a balanced tax policy along with robust enforcement and greater inter-agency coordination.”

While chairing a panel discussion on policies to prevent counterfeiting and smuggling, Mr Deep Chand, Advisor, FICCI CASCADE and Former Special Commissioner of Police, New Delhi, said, “Counterfeiting and smuggling are not just economic crimes; they are serious threats to national security, public health, and consumer trust. We need coordinated policy reforms, real-time intelligence sharing, and stronger public-private collaboration, as well as raising consumer awareness to stop these traffickers. Such an approach rooted in both prevention and enforcement are key to protecting legitimate businesses and safeguarding India’s economic future.”

The other speakers included Mr Shrikant Awachar, Additional Director, Directorate of Revenue Intelligence, Ahmedabad Zonal Unit; Mr Ashish Paul, Vice President- Corporate Affairs, ITC Ltd. and Ms Anindita Mehta, CEO, Consumer Education & Research Centre.

Adding a local perspective and strengthening industry-government connect, Mr Parth Desai and Dr Jaimin Vasa, both Members of the FICCI Gujarat State Council, shared their perspective and highlighted the importance of collective action at the state level to curb the menace of illicit trade.

FICCI’s Committee Against Smuggling and Counterfeiting Activities Destroying the Economy (CASCADE) in its comprehensive 2024 report titled ‘Consuming The Illicit: How Changing Factors of Consumption Affect Illegal Markets in 5 Key Industries’, estimates the size of the illicit market in India at ₹7,97,726 crore in 2022–23. The five sectors most affected are FMCG (packaged foods), FMCG (personal and household care), alcohol, tobacco, and textiles & apparel. According to the findings, illicit trade continues to undermine legitimate businesses, disrupt fair market competition, and substantially reduce government tax revenues.

The report states that textiles and apparel contribute the largest share, with a reported illicit market size of ₹4,03,915 crore in 2022–23, accounting for over half of the total illicit trade. FMCG segments also show significant impact: packaged foods contribute ₹2,23,875 crore, and personal and household care goods add ₹73,813 crore, together comprising nearly 37 per cent of the total illicit market.

The report draws a direct link between high taxation and the scale of illicit trade, particularly in sectors like tobacco and alcohol that are historically subjected to heavier tax burdens. For instance, over 50 per cent of illicit trade in tobacco is attributed to punitive tax policies, while alcohol faces a comparable figure at 46 per cent.