Global Financial Integrity (GFI) has published a comprehensive study estimating the amount of revenue losses India incurred as a result of trade misinvoicing in 2016.

The non-governmental organisation (NGO) that lobbies for action against illicit financial flows (IFFs) analysed data published on the United Nations’ Comtrade database, and estimates that through trade misinvoicing in 2016 India lost approximately US$13 billion.

Revenue losses

That amount is 5.5 per cent of the value of India’s total government revenue collections in 2016 according to the report, India: Potential Revenue Losses Associated with Trade Invoicing.

GFI maintains that trade misinvoicing is the largest component of IFFs.

According to GFI’s calculations, the trade gap for misinvoiced goods equals US$74 billion, or 12 per cent of the country’s total trade of US$617 billion in 2016.

GFI’s methodology

The calculations measure revenue losses to misinvoicing by illicit financial inflows and outflows for both import and export under- and over-invoicing,

The report says some of the Indian imports most at risk of high values of import under-invoicing were edible fruits and nuts, sugars, vehicles and cereals.

Goods and locations

It adds that some of the Indian imports most at risk of high values of import under-invoicing were imports from the US, Australia, South Africa and Ghana.

Almost two-thirds of Indian imports that appear to be most at risk for some degree of potential revenues losses are imports from just one country, China, which was by far India’s largest source of imports in 2016.

More information about and a link to download the GFI report, India: Potential Revenue Losses Associated with Trade Invoicing, can be found here.

Categories: Trade Based Financial crimes News