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81 Smuggling in India Report 2024-25

Case 3: Misuse of India-Sri Lanka FTA for arecanut imports

In January 2025, DRI uncovered a case where
importers evaded customs duty by misusing the
India-Sri Lanka FTA (ISFTA). Arecanut consign-
ments originating from Indonesia were routed
through Sri Lanka and falsely declared as Sri
Lankan origin to claim duty exemption under
Notification No. 26/2000-Customs dated 1 st
March, 2000. This allowed the importers to
pay nil Basic Customs Duty (BCD), despite the
goods being liable for 100% BCD under the
Customs Tariff. The estimated duty evasion is
₹9 crore.

iii. Evasion of Anti-Dumping Duty (ADD)

Anti-dumping duty is imposed on imports sold below fair value to protect domestic
industries from unfair trade practices. However, evasion occurs through misdecla-
ration, misclassification, overvaluation, false origin claims, or routing via third
countries under FTAs. Such practices not only harm domestic manufacturers but
also cause significant revenue losses to the government.

2.54%
6.46%
16
.3
16.36%6% Aluminium Items- alloys, coils etc.
9.66 Frames for Solar panels
9.66%
1.33% %
Glass Items- Mirrors, uncoated
glass
5.78% Isobutylene – Isoprene Rubber
Laser Machines

16.96% Pentaerythrtol 98%
PVC paste resin

Stainless Steel Items- tubes and pipes
.46%
37.46%
1.61%
1.61%
Synthetic Grade Zeolite 4A
1.82%
Thermoplastics polyurethane

Figure 5: % of total ADD evaded commodity-wise

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