As illicit trade booms, seizure mount

Source: The post is based on the article “As illicit trade booms, seizure mount: 3.5 tonnes of gold, 18 crore cigarette sticks and 90 tonnes of heroin caught in FY23” published in The Indian Express on 30^th September 2023.

Syllabus: GS 3 – Internal Security – Linkages of Organized Crime with Terrorism

Relevance: Findings of the report related to organized crimes in India

News: A report titled ‘Hidden Streams: Linkages Between Illicit Markets, Financial Flows, Organised Crime and Terrorism’ has been released recently by FICCI CASCADE.

What are the key findings of the report?

Illicit Financial Flows – Value Gap India (2009-2018): India has faced significant financial losses from misinvoiced imports and exports, with import misinvoicing alone causing a $9 billion loss in government tax revenue.

Additional losses come from uncollected value-added tax (VAT), customs charges, and corporate income tax.

Between 2009 and 2018, misinvoicing caused a total value gap of over $674.9 billion, leading to significant revenue losses to the government.

Terror and Crime in India: Economic Impact of Violence for India: India spends a lot of money on fighting terrorism and crime because the country is facing a growing number of security threats. In 2021, it spent $1170 billion at PPP, equivalent to 6% of its GDP.

Approximately 80% of these expenditures are dedicated to security measures. The report predicts that as India’s economy expands, the expenses associated with addressing terrorism and crime will also rise.

Organised Crime and Illegal Economy in India: As per data from the Global Organized Crime Index (2021), India’s organized crime actors have a relatively low aggregate score of 4.3, compared to the global benchmark of 5.2 among 122 countries.

However, India’s criminal networks score is higher at 6, exceeding the 5.8 average due to their widespread involvement in illegal activities, including drug and human trafficking, as well as the illegal wildlife trade.

Further, India’s overall illegal economy scores is at 6.3, surpassing the 5-country average among 122 surveyed. (Chart 1)

This implies that India has fewer criminal actors but a wider involvement in illegal activities like drug and human trafficking, as well as the illegal wildlife trade.

Drug Economy in India: India’s proximity to major drug-producing regions like the Golden Triangle and Golden Crescent has led the transportation and distribution of controlled substances.

In recent years, drug trafficking in India has surged, with over twice as many drug seizures in 2014-2022 compared to 2006-2013. The report identified cannabis as the prevalent drug in India along with synthetic drugs and heroin surpassing the global average.

What lies ahead?

Central Board of Indirect Taxes and Customs Chairman Sanjay Kumar Agarwal stressed that combating illicit trade, including counterfeiting, smuggling, and tax evasion, is vital for preserving India’s economic stability.

Chart 1

Source: The Indian Express