Illicit trade and counterfeiting threaten global economies and impact legitimate economic activity. It deprives governments of revenues for investment in vital public services, dislocating millions of legitimate jobs and causing irreversible damage to ecosystems and human lives.
Protecting tax losses post COVID-19
The COVID-19 crisis has caused a significant deterioration in public finances, which calls for a rethink of tax and spending policies once the recovery is well underway. As the second year of the pandemic comes to a close, the economic damage that the country has endured is evident. The 15th Financial Commission has estimated the shortfall in tax collections for FY 2020 at Rs 10 lakh crores, which is 28 per cent of India’s total budget. Further, according to sources, tax loss to the exchequer from counterfeiting products is estimated at approx Rs 39,239 crores. The pandemic has given criminals an even more significant opportunity to exploit gaps in the system and increase counterfeiting and illicit trade volumes.
Our recovering economy needs more protection against further economic drainage. Counterfeiting, illicit trade and smuggling immensely injure the financial well-being of the country by causing loss of taxes and revenue. Trade bodies, government officials, think tanks and NGOs have highlighted the crucial role of authentication and traceability programmes in boosting government finances strained by the COVID-19 pandemic.
Enhance India’s global leadership in health assuring quality made in Indian products
During the COVID pandemic, India has again emerged as one of the vital pharmaceutical and medical product manufacturing hubs serving global patients while adhering to GMP and quality regulations. However, there is always a risk from sub-standard, spurious, falsely-labelled, falsified and counterfeit (SSFFC) medical products.
In 2011, the Indian Government implemented traceability solutions for exports, and the pharmaceutical industry adheres to international standards and authentication protocols. Unfortunately, the domestic regulations and legal structures are not as well defined as required. Lack of this structure and gaps in implementation gives criminals a chance to take advantage of the system by plaguing it with sub-standard, falsified, spurious, or counterfeit medicines and medical equipment.
Illicit trade can derail several of the SDGs
The trade-in of illicit pharmaceuticals undermines the achievement of several of the SDGs, but none more so than depriving individuals of good health and wellbeing (SDG 3). The illicit trade in pharmaceuticals impairs the marketplace for genuine products, strains public health budgets, endangers jobs and economic activity, disincentivises pharmaceutical innovation and investment in Research and Development (R&D) of new drugs, impacts the environment as illegitimate manufacturers avoid good manufacturing practices, facilitate organised criminal activity, threaten lives, social stability, and peaceful communities.
Falsified, low-quality medication also has a problematic impact on antimicrobial resistance (AMR), where multi-resistant strains of some of the world’s most significant diseases, such as tuberculosis and malaria, are becoming a serious global public health threat.
Building a policy framework to ensure the implementation of active anti-counterfeiting mechanisms across sectors and appropriate budget allocation towards this effect can be a game-changer. This could aid in generating a considerable number of economic resources both for the businesses and the governments. These resources could be employed towards recovery and could fund important citizen welfare schemes of the government.