SRINAGAR: A seminar KONG POSH- Fight Against Counterfeiting and Smuggling was held here today to increase awareness among the masses and saffron growers to fight against the menace of counterfeiting and smuggling.
The seminar was organised by FICCI-CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) in collaboration with Space Communications and was inaugurated by Ghulam Ahmed Mir, Minister for Tourism and Ghulam Hassan Mir Minister for Agriculture.
Indias economic growth story has attracted the worlds attention bringing new challenges for the domestic economy. One of the major issues for the economy and the industry is the uninhibited growth of counterfeit, fake and smuggled goods. Counterfeiting is being considered the worlds fastest growing industry and per current estimates represents up to 10 per cent of world trade, speakers said.
With special focus on Kashmir the seminar highlighted the problems faced by the states saffron growers due illegal imports of low quality saffron which is damaging the Kashmir Brand. Thousands of saffron growers in Kashmir have suffered at the hands of smuggled and counterfeit saffron and are forced to move to other business. Illegal, inferior Iranian saffron has had the most significant impact on the industry. Another problem being faced by the industry is the rising price of saffron due to constant increase in demand. To avoid high import duties, criminals gangs based in the gulf are running mules to carry parcels of the spice in their luggage on international flights.
The Government of India has started National Saffron Mission to enhance the production and strengthen the traders. Indian saffron is threatened by smuggled saffron coming from different nations.
J&K has also emerged as a hotbed of the illegal cigarettes trade in India. The state represents one of the largest market for illegal cigarettes in the country. While these locally manufactured, tax-evading cigarettes constitute over 15% share of the cigarette market, there are more than 20 million illegal sticks sold in the state every month. Consequently, the state government suffers an annual tax loss of about Rs. 50 crore.
High taxation on cigarettes in India is the key reason for the large and growing market of illegal / tax-evaded cigarettes. Despite accounting for only 15% share of total tobacco consumption, cigarettes generate over 75% of the tax revenue from tobacco. According to the Euromonitor report on Illicit Trade in Tobacco Products, India is the fastest growing and is already worlds sixth largest market for illicit cigarettes.
In J&K, VAT (Value Added Tax) on cigarettes has increased from 13.5% to 40% in last two years (along with Toll Tax of Rs 35/- per kg) , thereby, giving an impetus to the inter-state smuggling and illegal trade.
According to the FICCI study on Socio-economic Impact of Counterfeiting, Smuggling and Tax evasion in seven key Industry Sectors the estimated annual Tax loss to government in the year 2012 is estimated at Rs. 26, 190 crores. The study further estimates an annual sales loss to industry at a whopping Rs. 1,00,000 crores. The key sectors which were included in the study were Auto Components, Alcohol, Computer Hardware, FMCG (Personal Goods), FMCG Packaged Goods), Mobile Phones and Tobacco. The highest loss to industry in terms of revenue is from FMCG (Packaged Goods) at Rs. 20,378 crores (23.4%), FMCG (Personal Goods) at Rs. 15,035 crores (25.9%), Auto Components at Rs. 9,198 crores (29.6%), Mobile Phones at Rs, 9,042 crores (20.8%) and Tobacco at Rs. 8,965 crores (15.7%). The maximum tax loss on account of smuggled and counterfeit products to the government is from the Tobacco Sector at Rs. 6, 240 crores followed by FMCG (Packaged food) at Rs. 5,660 crores and FMCG (Personal Goods) at Rs. 4,646 crores.
Mr. P C Jha, Advisor, FICCI CASCADE emphasised in the seminar that an increase in excise and VAT rates will not curtail consumption of sin products instead it will lead to incentivising smuggling and counterfeiting therefore causing heavy losses to the ex-chequer. This is only a myth that high rate of tax can reduce consumption of sin products and discourage purchase of such goods. On the contrary this gives incentive to unscrupulous and anti-social elements in society creating a major security threat to the nation. Thus Tax arbitrage creates opportunity for smuggling and counterfeiting. Policy makers should ensure that there is moderation in taxation so that we create a climate of win-win for government and consumer.
He further added that the citizens of the country are an important force to fight this socio-economic menace and consumers need to be vigilant towards their rights when making purchases they must strongly insist on a bill while making any purchase.
The seminar focused on the detrimental effects of smuggled, counterfeit and fake goods on the saffron production.