FICCI CASCADE Report

What’s in today’s article?

• Why in news?
• What is FICCI CASCADE?
• News Summary: As illicit trade booms, seizure mount
• Key highlights of the FICCI CASCADE report
• The challenge of illicit trade looms larger than before

Why in news?

• Recently, a report titled ‘Hidden Streams: Linkages Between Illicit Markets, Financial Flows, Organised Crime and Terrorism’ was released by FICCI CASCADE.
  • The report has inputs from multiple sources, including government data.

FICCI CASCADE

• About
  • FICCI CASCADE stands for the Committee Against Smuggling and Counterfeiting Activities Destroying the Economy
  • The Federation of Indian Chambers of Commerce and Industry (FICCI) established the forum in New Delhi in 2011.
  • FICCI CASCADE's goal is to combat smuggling and counterfeiting.
• Function
  • The platform has launched awareness campaigns and inter-school competitions.
  • It has also urged the government to launch an international campaign against smuggling.
• Some of the findings of FICCI CASCADE
  • FICCI CASCADE has highlighted the following:
    • The government lost over 508% of tax revenue from the alcohol industry.
    • The government lost 201% of tax revenue from the FMCG packaged foods industry.
    • The government lost 113% of tax revenue from the tobacco industry.
    • Smuggling and counterfeiting could hinder India's goal of becoming a 40 trillion-dollar economy.

News Summary: As illicit trade booms, seizure mount

Key highlights of the report

• Illegal economy in India
  • As per the report, the illegal economy in India has an overall score of 6.3 in India, which is higher than the average score of 5 of other 122 countries.
• Illicit Financial Flows – Value Gap India (2009-2018):
  • India has faced an approximate total potential revenue loss of US $13 billion involving both mis-invoiced imports and exports.
  • The situation was worsened by a financial loss of $9 billion resulting from the practices of import mis-invoicing.
  • The uncollected value-added tax (VAT) amounted to a total of $3.4 billion.
  • For the 2009-2018 period, the total aggregate value gap of mis-invoicing was over $674.9 billion.
  • The value gaps as the percentage of the trade, however, declined marginally.
• Terror and Crime in India: Economic Impact of Violence for India (Billions PPP)
  • Terrorism and crime have significant impact on security concerns and this has resulted in a considerable economic cost.
  • In 2021, India’s economic cost for violence was at US $1170 billion at purchasing power parity (PPP).
    • This accounts for approximately 6% of the country’s GDP.
  • Also, violence per capita impact for the same period is estimated at US $841 at PPP.
• Organised Crime and Illegal Economy in India
  • India’s aggregate score of organised crime is low at 4.3 (on a scale of 1-10), compared to the average benchmark of 5.2 for 122 countries.
  • The criminal network, however, has a significant influence in India.
    • This is due to criminal networks having a significant role in India’s organised crime scenario.
    • They have a widespread presence across the country and they are involved in a variety of illicit activities including drug and human trafficking and the illegal trade in wildlife products.
  • This is attributable to the efficacy of criminal networks in India, which enables them to generate substantial illicit financial flows despite their small numbers.
• Drug Economy in India
  • India’s is located near major drug-producing regions, including the Golden Triangle (Myanmar, Laos, and Thailand) and the Golden Crescent (Afghanistan, Pakistan, and Iran).
  • India’s location has been associated with activities that may involve the transportation and distribution of controlled substances.
  • There has been an increase in the illicit drug trade in India in recent years.
    • The FICCI report stated that 3,172 cases of drug seizures were recorded during 2014-2022 as against 1,257 cases in 2006-2013.
    • Total 4,888 arrests were made during the same period for these seizures involving 3.33 lakh kg of drugs worth Rs 20,000 crore.
  • Among the various kinds of drugs, Cannabis has a higher score of 7.5, compared to the benchmark average of 5.4, indicating its significant presence in India in comparison to other countries.
  • The synthetic drug trade and the heroin trade both had scores of 6.5, which exceeded the benchmark averages of 5.3 and 4.6, respectively.

The challenge of illicit trade looms larger than before

• Around 3.5 tonnes of gold, 18 crore cigarette sticks, 140 metric tonnes of red sanders and 90 tonnes of heroin were seized along with other drugs during the last financial year.
• The challenge of illicit trade looms larger than before and tackling issues such as counterfeiting, smuggling and tax evasion is fundamental to safeguarding India’s economic stability.

Q1) What is organised crime?

Organized crime is a group of people who commit crimes for profit. These groups can be local, national, or international. They can be politically or financially motivated. 

Q2) What is trade misinvoicing?

Trade misinvoicing is a form of customs and tax fraud. It involves at least one party to an international commercial transaction deliberately falsifying the value, volume, or type of commodity.

Source: As illicit trade booms, seizure mount: 3.5 tonnes of gold, 18 crore cigarette sticks and 90 tonnes of heroin caught in FY23 | FICCI CASCADE