Smuggling as defined under the Customs Act and couched in typical legalese refers to any act or omission which will render ‘such’ goods to confiscation. The definition is wide and relates not only to import but also export, to illegal import or attempt to export of goods, but also to attempts to evade, payment of the correct tax, or a restriction or prohibition.
At the end of the day smuggling is an economic activity. Policy makers must be cognizant and strike a correct balance between revenue, consequences thereof and larger social goals. Where there is demand and the supply is restricted or costly, smuggling will follow. Thus, a whole gamut of goods is presently sought to be smuggled.
Gold (despite record licit imports contributing to a widening trade gap) and tobacco are smuggled because of the incessant demand and the tax structure which provides an arbitrage and high profit. Narcotics and synthetic drugs because they are prohibited and the profit margins are astronomical given the demand fueled by the increasing incidence of drugs in the country; exotic animals again for the same reasons as are red sanders, an item falling under the Convention on International Trade in Endangered Species of wild fauna and flora (CITES) and restricted, which is attempted to be illegally exported to meet the demand in the far-east countries.
Then there are cases of products sought to be imported under the guise of licit import or mis-declared to evade duty or where trade is used to launder money. Smuggled goods are popular with the public at large because they are cheaper since they have not paid taxes or are otherwise prohibited.
The damage that smuggling does is enormous. Apart from the obvious generation of profits (higher the tax incidence, higher the profit) which are outside the tax net, this money, can in turn be used to fund other nefarious activity. All anti-national, terrorists’ activity ultimately is financed by such acts of evasion. And in case the money is to be transferred to the principal architect who may be located outside the country, hawala transactions which are outside the licit banking channels are utilised resulting in yet another offence.
Smuggling damages licit industry and results in licit jobs being lost. Yes, it does generate jobs which are necessary for the illegal activities, but these are criminal jobs and the country can do without these. Smuggled goods are invariably of poor quality with no after sales guarantees and are not safe — smuggled automobiles parts is a case in point. They can be health hazards especially since pharma products are also sought to be smuggled by unscrupulous criminals.
Serials like the popular Taskari currently on Netflix while glamorizing both the smuggler and the customs officer, undoubtedly are highlighting the problem but a lot more needs to be done. The daily seizures made the Directorate of Revenue Intelligence (DRI) and the other enforcement agencies is testimony to the fact the smuggling continues unabated. Enforcement agencies are stretched. With meagre resources they necessarily must make risk-based calls.
Criminals exploit this situation. Given the universally accepted acknowledgement that smuggling is harmful to the economy it is surprising that no specific day to highlight the dangers of smuggling and bring on board policy makers, enforcement agencies and the public at large on a common platform has happened thus far. CASCADE has conducted five editions of the Anti-Smuggling Day so far and awareness is being built-but obviously much more needs to be done.
The Global Risks Report 2025 published by the World Economic Forum lists criminal and illicit economic activity as a potent risk; illicit activities have been defined as those that undermine economic advancement and growth, and includes but not limited to illicit financial flows, illicit trade and cybercrime. The United Nations Office on Drugs and Crimes (UNODC) estimates that transnational organised crime generates more than 1.5% of global GDP; The United Nations Conference on Trade and Development (UNCTAD) estimates are much higher; they believe that illicit trade drains nearly 3% of the world’s economy with the illicit trade being valued at nearly US$3 trillion annually.
Undoubtedly substantial seizures of illicit traded goods and detections of evasion take place in India and globally— but everybody acknowledges that what is detected is miniscule portion of the criminal activity which takes place. A problem which generates such vast funds of illicit money, funds the activities of terror outfits, which impacts and disrupts all segments of society and nations, and which has been prevalent from across centuries with no signs of reducing, certainly warrants a bit more awareness. We should never forget that what is at stake is the national and economic security of the nation.
In this context the Central Board of Indirect Taxes & Customs (CBIC) the body which will be most adversely impacted by smuggling given their mandate to ensure the integrity of the borders should though the Ministry of External Affairs seek to influence the UN to recognise this day. There are UN international days for pulses, happiness, bee, argania (have you even heard of this — it is a thorny shrub found in Morocco) bicycle, lake, translation, post, television, football among the more than 200 days commemorated across the year for various causes.
Here is an activity which impacts every single country in the world, which needs coordinated action amongst enforcement agencies across the globe and within each country, which fuels terrorist activity, which is growing by the day — and yet. The idea of a day is to mobilize political will, public awareness about a particular issue so that concerted action can be initiated. While CASCADE is doing its bit, the day needs national and global recognition.
Observing an anti-smuggling day is not an admission of our inability to counter the problem; it is merely an acknowledgement of the extent of the problem and the urgent need to have all hands-on board especially the citizenry, to counter the menace. By merely not buying smuggled products we can cripple smuggling gangs. And if you were to still do so then we need to remember that we will have blood in our hands— we could very well by our act be financing, God forbid, the next terrorist activity in the country.
—The author, Najib Shah is former Chairman, Central Board of Indirect Taxes & Customs. The views are personal.
