FMCG, tobacco products, alcohol among the biggest hit in India

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FMCG, tobacco products, alcohol among the biggest hit in India

The Central government is estimated to have lost as much as 58,521 crore in taxes in the year 2019 -- 20 due to illegal trade in goods in 5 key industries. Ficci report titled 'Illicit Markets: A Threat to Our National Interests' by FICCI's Committee on Smuggling and Counterfeiting Activities Destroying the Economy identified FMCG mobile phone, tobacco products and alcohol as the most affected industries, with the size of illicit markets in these industries at a little over Rs 2.60 lakh crore for the year 2019 -- 20. In five key industries, the FMCG industry alone accounted for 75% of the total illicit value of goods. The regulated industries of tobacco and alcoholic beverages account for nearly 49% of the total tax loss in these industries. The report said that the multiplier is more powerful and the effect it has on the economy. Of the total illicit market size of Rs 2.60 lakh crore, household and personal FMCG industry household and personal goods, packaged foods are more than 1.97 lakh crore. This is followed by alcoholic beverages at Rs 23,466 crore, tobacco products Rs 22,930 crore and mobile phones Rs 15,884 crore. The report states that to deal with the menace of illicit markets in India, addressing the demand and supply gap, introducing tariffs to reduce tax arbitrage, creation of a conducive environment for innovation, and better international coordination and cooperation are some of the ways forwards. The government, industry, consumers, and international bodies need to work together to achieve the challenging and mammoth task of reducing illicit markets, it said.