Rising Taxes Fuel Fake Cigarette Trade In Kochi

An investigative report by The New Indian Express has revealed a surge in counterfeit cigarettes flooding the market in Kochi, driven by India's steep and rising tobacco taxes that create lucrative opportunities for smuggling networks. While government policies aim to discourage smoking through higher excise duties, the strategy has inadvertently fueled an underground economy. Counterfeit versions of popular Indian cigarette brands, along with foreign varieties lacking mandatory pictorial health warnings, are being produced in unregulated factories abroad—primarily in countries like Cambodia—and smuggled into Kerala. Kochi has emerged as a major transit and consumption hub due to its international airport and coastal access, with these fake products reaching tea shops, kiosks, bars, and local retail outlets.

The appeal for smugglers lies in the low-risk, high-profit nature of the trade. Customs officials note that unlike high-value items such as gold or narcotics, cigarettes require lower initial investment and carry lighter perceived penalties. A single 40-kg piece of checked-in luggage can hold contraband worth around ₹15 lakh, with profit margins often doubling the investment since no taxes are paid. Even if a shipment is intercepted, smugglers can recover losses through subsequent attempts. Networks increasingly use regular passengers, including women, as carriers, viewing cigarette smuggling as a lower-risk offense compared to other contraband. This has led to widespread availability of substandard, unregulated products that evade quality controls and health regulations.

Seizure data from Kochi airport underscores the scale of the problem. In the 2024-25 financial year, customs confiscated cigarettes valued at ₹8.7 crore. From April 2025 to January 2026, additional seizures totaled ₹1.45 crore, with a significant portion involving counterfeit Indian brands and untaxed foreign cigarettes. Recent operations have highlighted shipments from Southeast Asia, where production costs remain low due to lax oversight. The influx threatens legitimate tobacco businesses, deprives the government of substantial revenue, and exposes consumers to potentially harmful products that bypass age restrictions and safety standards.

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The phenomenon aligns with broader concerns over illicit tobacco trade in India, exacerbated by tax hikes that widen price differentials between legal and smuggled goods. Trade bodies and experts have warned that steep increases fuel smuggling, organized crime, and revenue losses estimated in thousands of crores nationwide. In Kerala, the issue compounds existing challenges with counterfeit goods, with reports indicating distribution networks supplying fake cigarettes to smaller shops for higher per-unit profits compared to genuine products. Public health implications remain serious, as these unregulated items often contain unknown additives and lack required warnings.

The report calls attention to the need for stronger enforcement, better tracking mechanisms, and possibly a review of tax policies to curb the shadow market without undermining anti-smoking goals. As smuggling networks exploit these gaps, authorities face the challenge of balancing revenue generation, public health objectives, and effective border controls in a high-demand region like Kochi.

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