Illegal Cigarette trade comprising international smuggled and locally manufactured tax-evaded cigarettes accounts for as much as 1/3rd of the Legal Cigarette volumes 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.”
In the recent past, there have been various instances of seizure of illicit cigarettes in the North Eastern part of the country, especially through the porous borders along the Indo Myanmar border. The Indian Government has taken a serious view of the growing illicit cigarette trade and in the past few years, enforcement agencies have made focussed efforts to seize illicit cigarette stocks across the country.
Over the past few years, the media has reported several cases of evasion of taxes/duties by dealers in illicit cigarettes which came to light because of raids conducted by Directorate General of GST Intelligence (DGGI).
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.