The Enforcement Directorate (ED) on Wednesday conducted searches at several locations linked to Delhi-based industrialist Vikas Garg, chairman of Ebix Inc., in connection with an alleged ₹190 crore customs-duty fraud and the subsequent money-laundering probe.
The Alleged Scheme: Duty-Free Imports Diverted Into Domestic Market
According to ED sources, the investigation is based on a CBI FIR filed in 2023, which itself stems from findings of the Directorate of Revenue Intelligence (DRI). The allegation is that between 2015 and 2017, companies authorised to import duty-free goods for export/re-export instead diverted those consignments into the Indian domestic market, evading customs duty that legitimate importers were paying.
Key points include:
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Titan Sea & Air Service Pvt Ltd (Mumbai), led by Jagannath Rai and Chandra Shekhar Rai, had permission to import duty-free materials under FTWZ/SEZ rules for re-export.
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Instead of re-exporting the goods, consignments — including PVC resin and betel nuts imported duty-free from Dubai and Indonesia — were allegedly sold domestically through other firms, such as Sakshi Marketing Pvt Ltd (Delhi).
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The diversion was allegedly facilitated by forged shipping bills and fake customs seals showing exports to Nepal/Bangladesh.
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The estimated loss to the exchequer: ₹190 crore in unpaid customs duty.
Investigation and the Money-Laundering Trail
Following the CBI case, the ED registered a probe under the Prevention of Money Laundering Act (PMLA) to trace the proceeds of crime, identify shell layers, and attach assets.
Noteworthy developments:
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Vikas Garg is already under ED scrutiny for earlier allegations related to share-price manipulation and a betting-app linked laundering probe involving the Mahadev app case.
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Raids were carried out across Delhi, Mumbai, and additional locations to gather evidence on fund flows, corporate structures, and real estate or financial assets tied to the diversion scheme.
Why This Case Matters
The investigation is significant for multiple reasons:
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It highlights the ongoing abuse of duty-free import schemes and FTWZ/SEZ rules for domestic market diversion — a known loophole in trade regulation.
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The scale of alleged evasion (₹190 crore) suggests a coordinated network, not isolated wrongdoing.
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The case spans several regulatory domains — customs, imports-exports, FTWZ/SEZ, corporate securities, and money-laundering — making it a major test of inter-agency coordination.
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Given Garg’s links to listed companies, the case may prompt SEBI scrutiny over issues such as insider trading and market manipulation.
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It reflects a broader enforcement shift toward complex financial and trade-fraud investigations.
Key Questions to Watch
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Asset Attachments: How quickly will ED freeze or attach domestic and overseas assets linked to the alleged fraud?
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Securities Angle: Will SEBI open parallel probes into Garg’s listed firms — Vikas Ecotec, Vikas Lifecare, Eraaya Lifespaces, Advika Capital — and examine earlier allegations of manipulation?
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Regulatory Reforms: Will the misuse of FTWZ/SEZ duty-free allowances prompt tighter customs checks or policy changes?
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Prosecution Timeline: Will ED/CBI move swiftly to file chargesheets or make arrests, or will the case slow down amid litigation?
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Impact on Trade Policy: Will this case trigger wider inspections across commodity import sectors such as resins, agriculture, and allied exports?
Risk Assessment and Commentary
For Vikas Garg and his business group, the case represents a severe regulatory and reputational crisis. If proven, the diversion of duty-free imports indicates not just procedural violations but an organised fraud mechanism. Linking the alleged scheme to money-laundering raises the stakes significantly.
For enforcement agencies, a decisive outcome would set a powerful deterrent precedent, especially in areas involving cross-border trade and financial layering. However, the complexity of the case — multiple jurisdictions, Dubai/UAE trade partners, shell entities, logistics manipulation — means the investigation will be long and resource-intensive.
Conclusion
The ED raids on Vikas Garg in the ₹190 crore duty-fraud case reflect more than a routine enforcement action. They signify a convergence of trade fraud, corporate irregularities, and money-laundering, and could become a landmark case if agencies manage to secure asset attachments, file strong prosecution cases, and push for structural regulatory reforms. The coming months will determine whether this investigation becomes a major win for India’s enforcement framework — or another high-profile case that loses momentum before closure.
