In a major development, the Enforcement Directorate (ED) has intensified its investigation into several Indian companies suspected of transferring a staggering Rs 50,000 crore to China through illegal hawala networks. This probe is part of the agency’s broader effort to crack down on illicit financial flows, which threaten India’s economic security.
Initial findings reveal that numerous firms have been under-invoicing luxury products, including high-end furniture and gadgets imported from China. By declaring lower invoice values, these companies evade substantial taxes and duties. The balance, which evades regulatory oversight, is allegedly sent through hawala channels to Chinese suppliers. Over Rs 50,000 crore has reportedly been siphoned off through these illicit methods in just the past six months.
The investigation has also uncovered the use of cryptocurrencies and cash in these illegal dealings. Payments are often facilitated through digital currencies, adding a layer of complexity to tracking the financial flows. The ED is now focusing on this angle under the Prevention of Money Laundering Act (PMLA), raising concerns over the role of cryptocurrencies in enabling these transactions.
The Indian government has taken significant steps to curb these malpractices. The Central Board of Indirect Taxes and Customs (CBIC) has already seized multiple shipments from China, suspected of being undervalued. In an effort to tighten its grip on such illegal activities, the CBIC is also enhancing risk-profiling of high-value consignments.
The practice of under-invoicing has wide-reaching consequences for the Indian economy, not only depriving the government of crucial revenue but also exacerbating the already concerning trade deficit with China, which surpassed $100 billion in 2022. This latest crackdown by the ED is expected to escalate, with deeper investigations likely to reveal more violations across industries reliant on Chinese imports.
As the inquiry deepens, both the ED and the Indian government are preparing for a protracted battle to safeguard the country’s economic interests against the tide of illicit financial activities linked to under-invoicing.
Source: Various News Platforms
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