What are the findings of the study “Enemy: Impact of Smuggling on Indian Economy and Employment”?

The study “Enemy: Impact of Smuggling on Indian Economy and Employment” was conducted by FICCI CASCADE and conducted by Thought Arbitrage Research Institute (TARI).

Findings of the Study

• Illegal movement of goods (smuggling) in five sectors namely textiles, ready-made garments, cigarettes, machinery and parts and consumer electronics prevented the addition of over 16 lakh jobs in India in 2017-18.
• Of 16 lakh jobs, over 5 lakh jobs addition was directly impacted because of smuggling. This included employment of those working in labour-intensive sectors like readymade garments and tobacco products and a considerable chunk lost direct employment opportunities.
• Of the 16 lakh jobs over 11 lakh jobs were lost was because of backward linkage and multiplier effects of these industries .i.e. i.e, industries which are ancillary or are indirectly linked via production process to these sectors lost jobs as finished products were smuggled in India.
• The report estimates that smuggling and output loss to the domestic readymade garments industry increased to Rs 5,509 crore in 2017-18 from Rs 3,780 crore in 2015-16.
• Trade in smuggling, contraband, counterfeit and pirated goods has increased steadily in the last few years and stood at 3.3 per cent of global trade.

How Smuggling impacts manufacturing?

The manufacturing activity which would have ideally happened in India shifted abroad due to smuggling. Smuggling not only does this result in job loss in the country, but the government also loses out on customs and GST revenue which comes via legal trade.

Smuggling, counterfeit trade and piracy hold back progress, raises the cost of goods, leads to tax evasion, hampers job creation and creates safety hazards for consumers.