The Mumbai unit of the Directorate of Revenue Intelligence (DRI) said this week it arrested two people in connection with a ₹114.74-crore fraud. The scheme, investigators allege, relied on misdeclaration and overvaluation of garments exported to several African nations.
One of the men, an exporter, is accused of orchestrating the operation, while a private Customs broker allegedly facilitated the transactions in exchange for commissions. Both are now in custody as investigators analyze seized digital evidence.
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How the Scheme Worked
According to investigators, the syndicate exploited government export incentive schemes such as duty drawbacks and the Rebate of State and Central Taxes and Levies (RoSCTL). These schemes are meant to help garment exporters remain competitive by refunding embedded taxes.
But the accused allegedly procured low-quality garments from local markets without invoices, then exported them at prices up to six times higher than their actual value. The inflated invoices enabled them to claim excessive rebates and refunds. Preliminary findings suggest the group fraudulently availed ₹18.74 crore in duty drawback benefits and around ₹96 crore under RoSCTL.
Dummy Codes and Fake Documents
The DRI said the syndicate obtained at least 14 Importer-Exporter Codes (IECs) in the names of fictitious individuals to disguise its activities. Using these dummy codes, the group booked consignments from the Inland Container Depot at Talegaon, Pune.
Acting on specific intelligence, officials intercepted two consignments on Monday. Subsequent searches at eight premises in Mumbai uncovered fake invoices, incriminating digital records, and evidence of systematic misuse of export-linked schemes.
Broader Concerns for Trade Oversight
The case underscores how India’s export incentive framework—designed to stimulate trade and manufacturing—remains vulnerable to manipulation. By overvaluing shipments and using fictitious firms, exporters can siphon subsidies meant for legitimate businesses, costing the exchequer hundreds of crores.
Officials say further arrests are likely as the agency investigates the wider network. For now, the DRI’s action highlights not only the sophistication of export fraud but also the challenges regulators face in balancing trade facilitation with rigorous enforcement.