India Inc. is deeply concerned about the surging illicit trade, seeing it as a grave threat to the nation’s economy and security, warranting urgent action.
A report from FICCI, citing data from global agencies, reveals that India’s illicit financial flows account for approximately 5% of its GDP. This alarming figure underscores the severity of the issue, particularly trade-based money laundering, which reached a staggering $674.9 billion between 2009 and 2018, posing a significant threat to both the economy and security.
As India’s economy surpassed $3 trillion in 2021, estimates from the United Nations Office on Drugs and Crime (UNODC) indicate that money laundering in India could be around $159 billion, equivalent to 5% of GDP. This underscores the problem’s magnitude, driven by the growth of illicit markets, including trade, illegal drugs, and arms.
Recent data from the Directorate of Revenue Intelligence (DRI) highlights India’s substantial trade gap due to mis-invoicing, further emphasizing the burgeoning illicit trade. In 2021-22, the “Smuggling in India” report identified 437 instances of duty evasion, totaling Rs 3,924 crore, marking a 40% increase from the previous year.
Global Financial Integrity (GFI) estimates India’s illicit trade gap at 20%, which could translate to nearly $300 billion when India’s economy reaches $5 trillion. FICCI underscores the gravity of this issue, linking illicit trade to organized crime and terrorism, drawing parallels with other countries.
The report also raises concerns about counterfeit goods, public health risks from fake pharmaceuticals, and intellectual property challenges in India. The Global Organized Crime Index reveals a significant influence of criminal networks in India.
India’s strategic location near major drug-producing regions has contributed to a rising illicit drug trade. The report cites instances like Operation Dhvast, where the NIA dismantled a nexus involving terrorists, gangsters, drugs, and arms.
To address this problem, the FICCI study proposes a 6-point policy recommendation:
- Regulate terrorism and organized crime under a comprehensive framework.
- Continuously assess and address illicit financial flows.
- Establish a central coordinating agency.
- Promote awareness and alter consumer preferences.
- Combat trade-based money laundering.
- Enhance international cooperation and coordination.
By FCCT Editorial Team
, an independent military force, and allied militias in Sudan raped several dozen women and girls in West Darfur’s capital, El Geneina, and those fleeing to Chad between late April and late June 2023, Human Rights Watch said today. The assailants appear to have targeted people because of their Massalit ethnicity and, in some cases, because they were known activists.){kind=link}