India uncovers Rs 2,500 crore areca nut duty-evasion scheme
India’s Directorate of Revenue Intelligence has dismantled a network accused of declaring Southeast Asian areca nuts as Bangladeshi products to claim SAFTA duty exemptions. The investigation has identified a potential revenue loss exceeding Rs 2,500 crore and led to nine arrests.
DRI targets fraudulent SAFTA claims
India’s Directorate of Revenue Intelligence has dismantled a network accused of importing areca nuts from Southeast Asia while falsely declaring Bangladesh as their country of origin. The alleged scheme allowed Indian importers to claim a full customs-duty exemption available under the South Asian Free Trade Area agreement.
The investigation has so far identified a potential revenue loss of more than Rs 2,500 crore, according to a Finance Ministry statement reported by The Business Standard. Nine people have been arrested in connection with the case. The authorities described the operation as a systematic effort involving false origin declarations, fraudulent use of SAFTA preferences and large-scale customs-duty evasion.
A 100% duty created a powerful incentive
Areca nut imports into India normally attract a basic customs duty of 100%. Eligible shipments originating in Bangladesh, however, are fully exempt under SAFTA when they satisfy the agreement’s prescribed Rules of Origin. That difference created a substantial financial incentive to disguise products sourced elsewhere as Bangladeshi goods.
DRI intelligence indicated that several syndicates were claiming the preferential treatment on a large scale. Investigators found that the nuts originated in and were sourced from Indonesia, Thailand, Malaysia and other Southeast Asian countries. The consignments were then presented to Indian customs as products of Bangladesh, despite allegedly failing to meet the conditions required for Bangladeshi origin.
Network handled documents, clearance and transport
According to the investigation, the scheme extended beyond changing the declared origin on import documents. Its organisers allegedly charged Indian importers substantial commissions to arrange the routing, paperwork, customs clearance and domestic transportation of consignments. The network also handled large-scale cash payments, the Finance Ministry statement said.
Investigators identified one customs broker firm as being particularly responsible for clearing most of the fraudulent areca nut imports found in the case. Following the DRI investigation, the broker’s licence was suspended. The available source material does not identify the firm, the arrested individuals or the volumes of nuts covered by the disputed declarations.
Scrutiny rises across the supply chain
The case is likely to intensify scrutiny of certificates of origin, shipment routes and supporting documents used for duty-free areca nut imports into India. Importers relying on SAFTA treatment will face greater pressure to demonstrate that their consignments satisfy the relevant origin rules rather than merely arriving through Bangladesh.
For legitimate suppliers in Bangladesh, stronger enforcement may protect access to the preference but could also produce additional verification requirements and slower clearance. Producers and exporters in Indonesia, Thailand and Malaysia remain exposed to India’s 100% basic customs duty when their goods are declared under their actual origin. Indian processors and traders must therefore account for both the tariff cost and heightened compliance risk when sourcing Southeast Asian nuts.
The investigation also illustrates how a wide gap between the standard tariff and a full preferential exemption can reshape trading routes and create opportunities for origin fraud. The DRI says the operation has disrupted the network, but the statement describes the inquiry as ongoing, leaving the final duty assessment and the full extent of the implicated shipments unresolved.
