Illegal Cigarette trade comprising international smuggled and locally manufactured tax-evaded cigarettes accounts for as much as 1/4th of the Cigarette Industry in India. According to Euromonitor International, India is the 4th largest illegal cigarette market in the world.
There is widespread and growing presence of illegal cigarettes throughout the country. Acknowledging the serious threat posed by illicit cigarette trade, the Head of the WHO FCTC Secretariat, Dr. Adriana Blanco Marquizo, recently stated that illicit cigarette trade “…causes substantial losses in government revenues, and at the same time contributes to the funding of international criminal activities.”
Illicit operators have benefitted from the pandemic led disruptions, which presented several challenges to the legal cigarette industry. While the domestic tobacco industry continues to deal with the numerous challenges posed by the pandemic, the illegal cigarette trade continues to grow unabated.
Acknowledging the massive growth in illegal cigarette trade in the country in the recent times, the Minister of State in the Ministry of Commerce and Industry, informed the Lok Sabha on 17th March 2021 that seizures of illegal cigarettes during the first 11 months of 2020-21 amounted to Rs.1772 crores. This was almost 10 times higher than the seizures in the year 2019-20.
It is important to note that the reported seizures are only the tip of the gigantic iceberg of a much larger operation. In fact, for every such seizure, multiple consignments escape the surveillance net, due to the overwhelming volumes involved, despite the best efforts of the enforcement authorities. This is evidenced by the widespread availability and universal presence of smuggled cigarettes across markets.
The WHO Technical Manual on Tobacco Tax Policy and Administration – 2021 Report notes that the illicit trade – including smuggling and illicit manufacturing – and tax avoidance undermine the effectiveness of tax policies and their objectives. Criminals who engage in illicit trade of tobacco products are usually also engaged in related criminal activities such as bribery, money laundering, corruption, obstruction of justice and even financing of terrorist organizations.
Here is a list of Media reports on the seizure of illegal cigarettes from across the country.