Research by a PhD scholar into trade mis-invoicing in India between 2007 and 2017 indicates that patterns of over- and under-invoicing vary by the product as well as by trading partner.

Using trade data to reveal discrepancies between reported values of imports and exports according to Indian data and data from its trading partners, Aastha Jain found that for some products, discrepancies appeared quite minor. But in terms of percentages and the amount of revenues not captured by states, the data presents a dismal picture.

Variable patterns

The research concludes that patterns of mis-invoicing vary by the product and by trade partner.

Commodities in the set of products exported to and imported from the UAE consistently showed over-invoicing during the entire period for which data were presented.

Mixed results

Jain found that for the same product, data showed mixed results of mis-invoicing that differed by the trading partner.

As an example, she says exports of non-industrial diamonds to China exhibited export under-invoicing (of US$10.67 billion) while over-invoicing was observed in the case of exports of the same product to the UAE (US$18.06 billion) and Hong Kong (US$10.4 billion).

Greater scrutiny

The study revealed that Korea is the trade partner showing highest level of export under-invoicing with India.

The results of the study point to the fact that there needs to be greater scrutiny and transparency in the recording of trade transactions Jain concluded.

Trade Mis-invoicing. Evidence from India, 2007–17 by Aastha Jain can be found here.

Categories: Trade Based Financial crimes News