Smuggling of goods in the textiles, ready-made garments, cigarettes, machinery and parts and consumer electronics industries prevented India from adding over 16 lakh jobs in 2017-18, shows a new study on the issue.
“Total estimated livelihood opportunity lost in the economy is about 16.36 lakh because of the estimated smuggling in these five industries because of backward linkage and multiplier effects of these industries,” stated the study titled Invisible Enemy: Impact of Smuggling on Indian Economy and Employment. The study was commissioned by Ficci CASCADE and conducted by Thought Arbitrage Research Institute (TARI).
Of this, over 5 lakh jobs were prevented from being added to these sectors directly. Labour-intensive industries like readymade garments and tobacco products experienced a chunk of the loss in direct livelihood opportunities.
The remaining 11.35 lakh job opportunities were a result of the “backward linkage and multiplier effects” mentioned in the report. This means that other industries linked to the production process in these key industries, including ancillaries, together lost out on over 11 lakh jobs as a result of smuggling of these products, according Ficci advisor PC Jha.
“This type of study has been conducted in India for the first time to see what the impact of smuggling of these five key commodities has been on the job opportunities in the country,” Jha told The Indian Express.
“When smuggling takes place, the manufacturing activity that could have taken place in India has shifted abroad. The goods manufactured in these other countries are being brought to India in an illegal manner to cater to the demand here,” he said, adding that this means that the government also loses out on customs and GST revenue that it could have made from legal imports of these products. Estimates in the study show that smuggling of cigarettes rose to Rs 8,750 crore in 2017-2018 from Rs 7,183 crore in 2015-16, resulting in 14-20 per cent of output loss to domestic tobacco manufacturers.
The estimated smuggling and output loss to the domestic readymade garments industry also rose to Rs 5,509 crore in 2017-18 from Rs 3,780 crore in 2015-16, according to the study.
Trade in smuggling, contraband, counterfeit and pirated goods has risen steadily in the last few years and now stands at 3.3 per cent of global trade, according to Ficci’s release about the report.