ED Busts Codeine-Smuggling Racket Using Shell Pharma Firms

The Enforcement Directorate (ED) has intensified its investigation into a major codeine-based cough-syrup smuggling racket allegedly operated by Shubham Jaiswal, who is accused of diverting pharmaceutical narcotics on a large scale using a web of shell companies. The case spans multiple states, revealing a sophisticated network that exploited loopholes in India’s pharmaceutical licensing and supply-chain systems. ([the420.in](https://the420.in/shubham-jaiswal-codeine-smuggling-racket-shell-pharma-firms-india/?utm_source=chatgpt.com))

The Racket: Codeine Cough Syrup Diverted on Massive Scale

Investigators say the network illegally procured large quantities of codeine phosphate–based cough syrups, which are tightly regulated under the Narcotic Drugs and Psychotropic Substances (NDPS) Act.

Instead of selling these medicines through authorised medical channels, the accused allegedly diverted consignments to illicit distribution networks across states, particularly in regions witnessing a surge in codeine addiction.

Authorities believe this diversion was enabled through:

• Fake wholesale pharma licences obtained under shell company identities.
• Forged purchase orders for high-volume cough syrup consignments.
• Benami transportation channels to move contraband across state borders.
• Cash-based settlements that obscured the money trail.

ED sources state that the scale of procurement suggests the racket was running for years, with codeine syrups being trafficked domestically and possibly moved across border regions for high-profit black-market sale.

Shell Pharma Firms at the Heart of the Operation

According to the ED, accused Shubham Jaiswal floated or controlled multiple shell pharmaceutical entities. These firms existed largely on paper — with no real infrastructure, no legitimate stock movement, and no licensed retail networks.

They were created with two goals:

• Obtain wholesale drug licences fraudulently.
• Show fake billing and documentation to mask illegal procurement of codeine syrups.

This enabled the accused to source huge volumes of controlled cough syrups from unsuspecting or complicit manufacturers and distributors, under the guise of legal wholesale trade.

Raids, Seizures and Financial Trail Under ED Scanner

Multiple premises linked to Jaiswal and his associates have been raided. Investigators have recovered:

• Fake invoices and transport documents.
• Sealed cartons of cough syrups suspected to be diversion stock.
• Digital evidence showing financial transactions.
• Bank statements linked to personal and shell-firm accounts.

The ED is now tracing the money trail to identify cash deposits, benami accounts, and potential hawala routes used to launder income from codeine smuggling.

According to officials, the racket appears to be far bigger than initially believed, with proceeds possibly running into several crores.

Growing Problem: Codeine Abuse and Illegal Pharma Supply Chains

The case highlights a disturbing trend: illegal codeine-based cough syrup networks are rising across India, particularly in northern and eastern states.

Codeine, a semi-opioid, is misused by addicts due to its sedative, euphoric effects — making cough syrups a cheap and easily accessible narcotic substitute when diverted unlawfully.

Recent crackdowns by state police and NCB have exposed multiple cases of large-scale cough-syrup smuggling, pointing to:

• Weaknesses in pharma supply-chain monitoring.
• Misuse of wholesale licences.
• Collusion among transporters, distributors and middlemen.

The ED believes that the Jaiswal network is part of this larger national problem.

Legal Action Under PMLA and NDPS

The ED has registered a case under the Prevention of Money Laundering Act (PMLA), based on predicate offences already registered by police under the NDPS Act.

If evidence confirms laundering of illicit proceeds, the accused may face:

• Attachment of assets purchased with proceeds of crime.
• Criminal prosecution under PMLA, carrying strict penalties.
• Additional NDPS charges that can lead to long-term imprisonment.

Authorities are also examining whether pharma distributors, transporters, or medical-supply intermediaries knowingly facilitated the racket.

The Road Ahead: Nationwide Crackdown Expected

The ED is reportedly coordinating with state drug-control departments, NCB, and police teams across several states to map the wider network.

Officials expect:

• More arrests in coming weeks.
• Further attachments of properties and bank accounts.
• Cancellation of fraudulent drug licences.
• Possible action against complicit pharma distributors.

This case could prompt a nationwide review of cough-syrup procurement practices, especially concerning bulk orders by newly registered wholesale entities.

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