RSS affiliate SJM says rising smuggled cigarette threat to govt revenue, public health

New Delhi, Jan 18 (PTI) Expressing grave concern, the Swadeshi Jagran Manch (SJM), affiliated with the Rashtriya Swayamsevak Sangh, has warned that the increasing influx of smuggled foreign cigarettes is severely affecting both government revenues and public health.

High taxes on sin goods have historically led to expansion of the black market, with smuggled products - often benefiting foreign producers - filling the gap created by unaffordable legal prices, Swadeshi Jagran Manch (SJM) national Co-Convener Ashwani Mahajan told PTI.

There is a need to have a balanced approach, he said, making a case for stronger enforcement against smuggling networks.

These concerns assume significance as the country prepares for a sharp increase in cigarette taxes effective February 1.

As authorities impose more taxes on sin goods, it leads to a surge in illegal trade and dumping of sub-standard products in the market.

It not only impacts the health of people in general but also results in revenue loss for the government and domestic manufacturing capacity, Mahajan said.

He further said policymakers should consider ground realities and avoid creating conditions where smuggling becomes the only alternative, undermining domestic producers and honest retailers.

"The majority of small retailers wish to earn an honest livelihood, but the unchecked spread of illegal products by unscrupulous elements distorts the market and creates unfair competition," he pointed out.

Talking about other sectors, he said some issues of circumvention of customs duties by misclassification have come to light in the case of e-rickshaw, apart from illegal import of cheaper footwear and many more items from China.

Even the retailers' bodies and the Indian Sellers Collective warned of the wider impact of illicit trade on livelihoods and the country's vast retail chain.

According to Abhay Raj Mishra, Member and National Coordinator of Indian Sellers Collective, the latest hike in tobacco taxes could worsen the already serious problem of smuggling and illicit sales.

In the past, he said, increased taxes on gold led to a huge surge in smuggling of the yellow metal.

International experience from Australia clearly shows how overly aggressive tobacco taxation can backfire, he said.

Observing that smuggling remains a major menace in India due to porous borders and entrenched illicit supply network conditions, Mishra said this worsens when legal products become prohibitively priced.

Recent global examples underscore this risk, from the shutdown of a cigarette manufacturing facility in South Africa after smuggled sales overwhelmed the legal market to the detention of a former senior customs official in Azerbaijan in a high-profile tobacco smuggling case, highlighting how price distortions can fuel organised and systemic illegality, he added. PTI DP BAL BAL BAL