FRAI appeals Centre to cut high taxes on daily goods to stem their illicit trade

High taxes on ‘Make in India’ products are creating a huge demand for smuggled and counterfeit products across the country and are forcing millions of small and impoverished shopkeepers to deal with criminals and be part of this illegal activity, the Federation of Retailer Association of India (FRAI) said on Tuesday.

The FRAI, a representative body of about 80 lakh micro, small and medium retailers from across the country with a membership of 42 retail associations, urged the government to reduce high taxes on daily consumption goods to stem their illicit trade.

“There has been an alarming rise of smuggled and counterfeit products particularly in daily consumption products that are sold by our members. Such illegal products are easily available across the country including in rural markets and their share is around 25-30 per cent of the total market,” said Ram Asre Mishra, President, FRAI.

FRAI made a representation to Finance Minister Nirmala Sitharaman with an appeal to protect the interests of its 80 lakh retailers.

These retailers sustain their livelihood by selling goods of daily needs like biscuits, soft drinks, mineral water, confectioneries, cigarettes, among others.

The small retailer’s pre-lockdown earnings were about Rs 6,000 – Rs 12000 per month which is barely adequate to feed a family.

According to the FRAI, the slightly bigger shops or the medium retailers earn about Rs 400-Rs 500 per day, whereas the micro retailers earn as little as Rs 200 per day.

“Our members are mostly uneducated and belong to the lowest economic strata of the society. Many of them have borrowed money to run their shops instead of depending on the government for employment,” said Mishra.

Smugglers and criminals involved in counterfeiting activities cause financial, mental and physical harassment to “millions of our members to sell their illegal products”.

Media reports suggest that Chinese companies based outside India and other dubious multinational companies are behind these criminal and anti-social activities.

Since Smuggled and Counterfeit products completely evade taxes they can easily outsell legally produced goods by selling at half price or even at one-third of the price of a particular item. This is causing the loss of thousands of crores in revenue for the government, said the FRAI.

“Our members are law-abiding citizens of the country but some of our members have been forced into selling smuggled and counterfeit products because of huge demand for them, as they are significantly cheaper as compared to legal products,” said Vinay Kumar, Secretary, FRAI.

FRAI advised its members not to engage in selling counterfeit or smuggled products.

However, as business for legal products is shrinking, “they have no choice but to fall prey to meet the minimum earnings needed to sustain their livelihoods,” said the federation.

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