According to a study by think-tank Global Financial Integrity (GFI), India lost $13 billion in revenue collections due to trade misinvoicing in 2016. It amounted to 5.5% of total revenue collections.
- The GFI measured the losses by calculating illicit financial inflows and outflows for both import and export under- and over-invoicing.
- The study estimated that the value of the trade gap for misinvoiced goods equaled to $74 billion or 12% of the country’s total trade of $617 billion in 2016. Of the total estimated potential lost revenue of $13 billion, about $4 billion was due to export misinvoicing and nearly $9 billion was due to import misinvoicing.
- The $9 billion in import misinvoicing was further broken down by uncollected value added tax ($3.4 billion), uncollected customs duties ($2 billion) and uncollected corporate income tax ($3.6 billion).
- In 2016, Indian imports at risk for high values of import under-invoicing were for edible fruits and nuts, sugars, vehicles and cereals imported from the United States, Australia, South Africa and Ghana.
- On the evaluation of the high-risk commodities and high-risk trade partners, GFI found that under-invoiced imports of edible fruits and nuts were from Ghana, mineral fuels from Australia and South Africa, Electrical machinery from China. They were highlighted as potential high-level risks for revenue losses.
- Two-thirds of Indian imports which appeared to be most at risk for some degree of potential revenues losses were the imports from China alone.
- GFI urged India to adopt a public registry of beneficial ownership information on all legal entities. It considered using online tools for building the capacity of customs authorities to better detect misinvoicing and take corrective steps in real time.
♦ Headquarters: Washingtion DC
♦ Founded: 2006
♦ Founder: Raymond W. Baker