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Crime of 21st Century

Illegal business operations represents 10 per cent of the global trade and has been termed as the crime of the21st century by the Federal Bureau of Investigation


THE world’s fastest growing economic activity is unfortunately one that is having a detrimental impact on trade, employment, innovation, security and the health of people living across the length and breadth of the world. This activity is called ‘illicit trade’ and its tentacles have spread so far, that over the last ten years, it has grown from $650 billion to nearly $3 trillion. This illegal business operation represents 10 per cent of the global trade and has been termed as crime of the 21st century by the Federal Bureau of Investigation (FBI).

Beyond the numbers, there is another deadly impact of illicit trade, its direct relation to funding terrorist organisations and thereby giving teeth to their sinister plans.Today, the most dreaded terror organisations rely heavily on the proceeds from illicit trade. The Islamic State (ISIS) is into the illicit trade of cigarettes, oil and mobile phones; the Hezbollah deals in medicine and drugs; Al-Qaeda in clothing and bags; the Irish Republican Army (IRA) focuses on pirated discs and clothing while Hamas prefers drugs and food products. In 2017, six out of the eight deadliest terror attacks in the world that claimed the lives of 1,500 people were planned, financed and executed by ISIS, Al-Qaeda and Taliban and according to the Global Terrorism Database of the University of Maryland, 2016, these terror outfits are responsible for 70 per cent of the world’s terror victims. Illicit trade, therefore, is the fuel that powers the terror machine. It threatens the peace and stability of regions worldwide and no nation is insulated from its vicious impact. In this context, countries need to join hands and address it as a matter of immediate priority.

With its impact on brand India increasing by the day, FICCI decided to confront this problem head on and decided to dedicate a forum by establishing a Committee Against Smuggling and Counterfeiting Destroying the Economy (CASCADE). This works closely with the industry, consumers, media, legal experts, consumer organisations and government to create awareness about illicit trade and emphasise on the urgent need for collective action. In a first of a kind report released by FICCI CASCADE in 2015, the impact of illicit trade on 7 key sectors in India namely automobile parts, FMCG (personal and packaged goods), alcoholic beverages, tobacco, mobile phones and computer hardware, the estimated loss to the industry was about Rs 105,381 crore and loss of revenue to the government was Rs 39,239 crore.

Over the past five years, FICCI CASCADE has upped the ante and joined hands with several institutions of international repute such as WIPO, UNODC, Interpol, OECD, WCO, UKIPO, USPTO, US Department of Homeland Security, JETRO, Australian Border Protection among others to fight for the cause and heighten response on the impact of illicit trade. This led to the emergence of Movement Against Smuggled and Counterfeit Trade (MASCRADE). Since 2013, FICCI CASCADE has been organising international conferences to generate awareness, find tangible solutions and chalk out a sustainable road map to thwart the evil impact of illicit trade. In view of the increasing menace of illicit trade, both in terms of value and magnitude, FICCI CASCADE is of the opinion that there should be a strong will within the government to make this a national priority with the sole objective of eliminating this evil. In order to get superior results, it is important that there is better coordination between the different departments of the government. This will ensure seamless flow of information and the decision-taking time frame will be considerably reduced. Emanating from the deliberations of the international conference, the following recommendations have been forwarded to the government:

  • PMO and Cabinet Secretariat: Setting up of an umbrella body, i.e. a multi-agency centre at the Prime Minister’s Office and the Cabinet Secretariat. Its objective will be to share intelligence, enhance cooperation, make policy recommendations, capacity building and liaison with national and international bodies. This could be done by establishing a new set-up or revamping existing set-ups such as Central Economic Intelligence Bureau (CEIB) to have an effective organisation. This proposed set-up would have a centralised body at the helm, with two wings–a Planning and Policy Wing with Chief Justices and Judges, Secretaries in Ministries and Economists as members and the second would be an Operation and Execution Wing which would include representatives from the enforcement agencies.
  • Ministry of Home Affairs: Imparting special knowledge to the investigating officers through capacity building under IPR related cases is important and it is, therefore, recommended that a national and regularised system of capacity building for police officers on the negative impact of economic offences, needs to be in place. There is also lack of manpower in the special cells of the police force and it is recommended that additional manpower with the desired aptitude be provided to these cells, with the sole purpose of investigating IPR related cases. The investigating officers should have specialised training on technical issues so that they are able to understand the technical evidence and do justice with the investigation. Developing tailormade training programmes is another priority as these will help the investigating officers to focus on special requirements of the area of operations.
  • Illicit trade is the fuel that powers the terror machine. It threatens the peace and stability of regions worldwide and no nation is insulated from its vicious impact

  • Ministry of Finance: In the current reward scheme of the CBIC, monetary rewards are given to informers and enforcement officers for their role in detection and follow-up actions, however, the quantum of reward available for distribution is linked to the sale proceeds of smuggled goods. In addition, a recent instruction pertaining to cases of tobacco products, where they are not to be sold but destroyed on completion of the case and, therefore, no sale proceed amount is available for giving the monetary reward. It is suggested that like in the case of narcotics, where the government has a scheme for reward, a similar scheme may be extended to tobacco products as well.
    The government has to strike the right balance while fixing the tax rates, it needs to be understood that wherever the tax rate is higher, evasion of such goods increases and the availability of such products becomes higher in the illicit market. This goes against the objectives of the government. It is, therefore, recommended that a proper balance must be maintained in the taxation policy while fixing tax rates that takes into account all the related factors.

  • Ministry of Human Resource Development: India is the youngest nation in the world and children are becoming key stakeholders for advocating socially responsible behaviour. It is important to raise their awareness on the issue of illicit trade. It is recommended that the causes, ill-effects and magnitude of illicit trade be incorporated in the educational curriculum of middle and senior school as a chapter in the social sciences text books.
  • Ministry of Commerce and Industry- Department for Promotion of Industry and Internal Trade: At present, the penal provisions provided in the applicable laws such as Copyright Act, 1957 and the Trade Marks Act, 1999 are not adequate. It is recommended that like in the Customs Act, the monetary fine under the Trade Marks Act and Copyright Act may be extended up to the value of the offending goods along with imprisonment of up to seven years. This will go a long way in disincentivising people from participating in illicit trade.
  • Ministry of Consumer Affairs: Consumer awareness with regard to illicit trade leaves a lot to be desired. While some work has been done, it is recommended that a well-defined multimedia strategy be designed using various platforms like Twitter, Facebook, advertisements in cinema halls, mass SMS and so on. In addition, the finances available under the Consumer Welfare Fund of the government could be allocated for effective consumer awareness on illicit trade.
  • In conclusion, its critical to understand that it’s not just the financial losses that result from illicit trade, but also the intangible losses which have far reaching implications for society in terms of law and order and change in mindset towards crime. This cannot be quantified but has deep rooted implications on the development of civic society and has adverse, far reaching, long term impact on the nation. I’m confident that the government will take effective measures in the years to come which will enable a healthy environment and create a policy set-up that discourages the growth of illicit trade in the country.

    The writer is Sr. Vice President, ITC Ltd – Views expressed here are personal

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