According to a FICCI research, money laundering via illicit commerce accounts for around 5% of India's GDP

 According to a FICCI research, money laundering via illicit commerce accounts for around 5% of India's GDP

According to a research by the FICCI published on Thursday and based on information from foreign organizations, the impact of India's illicit financial flows amounts to about 5% of the GDP of the nation.

India Inc. is concerned about the explosive growth of illicit trade and sees it as a danger to the nation's economy and security that must be dealt with on a war footing.

According to a research by the FICCI published on Thursday and based on information from foreign organizations, the impact of India's illicit financial flows amounts to about 5% of the GDP of the nation.

According to the report, trade-based money laundering in India increased dramatically during a ten-year period from 2009 to 2018 to a staggering $674.9 billion. This figure "reflects the magnitude of illicit trade that has emerged as a major threat to the country's economy and security," it stated.

According to UNDOC estimates, the amount of money laundering in India might be calculated at $159 billion, or almost 5% of GDP, when the country's economy surpasses the $3 trillion level in 2021.This highlights the severity of the issue brought on by the expansion of illicit markets (trade, narcotics, guns, etc.) and non-market actors.

It makes reference to current data from the Directorate of Revenue Intelligence (DRI) to emphasize the expanding illegal trade and highlight India's significant trade deficit caused by misinvoicing.

437 instances of duty evasion of Rs 3,924 crore were reported in the Smuggling in India report 2021–22, a 40% increase over the similar amount of Rs 2,810 crore in 2020–21.

Global Financial Integrity (GFI) estimates that India's illicit trade deficit is currently 20%, which will amount to close to $300 billion when the nation's economy exceeds the 5 trillion-dollar threshold.

Given that their research demonstrates a direct connection between illicit trade, organized crime, and terrorism, FICCI has raised this as a serious concern. The study uses many nations from around the world as examples in this regard.

"The convergence of trade-based money laundering with terrorism raises significant concerns for our national security," the paper notes.

The paper notes that there are serious hazards associated with counterfeiting and illegal goods in India, including financial risks, threats to public health from phony pharmaceutical products, and problems with intellectual property.

With a score of 6, higher than the average score of 5 for 122 countries, India has a low frequency of organized crime actors but a large amount of influence from the criminal network, according to the Global Organized Crime Index for 2021.

The total score for India's unlawful economy is 6.3, which is higher than the global average of 122 nations, which is 5. The paper notes that this shows different criminal markets have a substantial impact on India's overall economic structure.

India had a score of 5.5 for arms trafficking, which is higher than the global average of 5.2 and reflects a complicated security issue. The Operation Dhvast case, in which the NIA broke up a terrorist-gangster-drug-weapons nexus in collaboration with the Punjab and Haryana police, as well as guns seizures in eight states, is also cited in the report to support its claims.

The research also notes that due to India's strategic proximity to significant drug-producing regions, the illicit drug traffic is now more common and has grown significantly in recent years.

The 6Cs are suggested as a policy suggestion and a course of action by the FICCI study to address the issue.

*Awareness of organized crime and terrorism inside a legal framework.

*Repeatedly and critically assessing illicit financial flow.

*Agency nodal in the center for better cooperation

*Increasing customer awareness and modifying preferences

The fight against trade-based money laundering

*International cooperation and coordination