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A first-of-its-kind report by FICCI shows how huge the losses are that the mobile phone industry is suffering due to the illicit market, that imitate the top brands.
The survey, which collated information from several sources, said the industry suffered a loss of ₹19,066 crore due to the illicit market in 2013-14.
“The quantum of loss is growing over the years. It mounted to ₹19,066 crore in 2013-14 as against ₹9,042 crore in 2011-2012,” Dipankar Barkakati, Head of FICCI Cascade, has said.
The computer hardware vertical took a hit of ₹7,344 crore.
Verticals hits
The report had surveyed seven industry verticals that are heavily suffering from illicit trading.
Counterfeit products, fake, and smuggled goods constitute illicit trading. “There was no such survey conducted earlier. We have put together numbers for these verticals, estimating the quantum of illicit trading and its impact on the industry as well as loss to the exchequer,” he said.
The total loss has been put at ₹1,05,381 crore in 2013-14 as against ₹72,969 crore in 2011-12. It covered verticals of alcoholic beverages, auto components, computer hardware, FMCG-packaged foods and personal goods, mobile phones, and tobacco.
FMCG-packaged foods and personal goods are the worst hit, with 40 per cent of the total losses coming from this segment only.
Tobacco woes
PC Jha, former Chairman of Central Board of Excise and Customs, said the vast differences in tax structures across different States were leading to smuggling of tobacco products. “The tax rates vary from 13.5 per cent to 65.5 per cent in different States. This is leading to flight of tobacco products from the low tax States to high tax States,” he said. The Government too, is a big loser, as a result of illicit market. It lost an estimated ₹39,239 crore in tax revenues last year, up from ₹26,190 crore in 2012.
The report called for measures to curb illicit markets by enforcement agencies, to deploy tech-based monitoring to identify counterfeit products, and improving the regulatory framework for patent protection.
