As India emerges from a public health crisis, the serious issues of illegal products need to be addressed on a war footing.
COVID-19-induced mobility restrictions gave an impetus to illicit trade of essentials and non-essential items. As a result, the alcohol and tobacco trade invariably hung in an uncomfortable situation.
According to a market research report by Euromonitor research and TII (2019), India has become the fourth-largest and fastest-growing illegal cigarette capital in the world, with smuggled cigarettes accounting for one-quarter of the domestic cigarette industry. Illegal trade more than doubled from 12.5 billion sticks in 2005 to 26.5 billion sticks in 2018, resulting in an annual revenue loss of Rs 13,000 crore to the government. In another report by Authentication Solution Providers’ Association, counterfeiting saw a drastic increase by 24 percent in 2019, as compared to 2018.
These numbers indicate the extent of damage caused by the grey market, casting a shadow on the Indian economy. The counterfeit and contraband trade market has widespread ramifications on consumer health because consumers often don’t realise that when they buy illicit goods, they are inadvertently contributing to a parallel cash economy and putting their health at risk.
While the government’s efforts with effective seizures should be lauded, there remains a significant opportunity to address loopholes across the supply chain to include ports, wholesalers and retailers as well as in a high taxation framework.
Globally, many countries with high tobacco taxes face the menace of the illegal tobacco trade. Using Thailand as an example, from 2005 to 2020 the country introduced 13 tobacco control measures including six tax increases, comprehensive bans on public smoking and advertising, a total vaping ban and plain packaging.