Digital black markets pose a national security threat; loss estimated at $4.2 billion : Gateway House Research

India is poised to transition to an open digital economy. This is seen in the growing budget allocation on digital infrastructure and the government’s vision of creating a Digital India. The increasing digitisation is accompanied with emerging cyber threats like digital black markets, where sale of contraband and illegal services is a big and profitable business.

A paper on digital black markets by Sameer Patil, Fellow, National Security Studies & Director, Centre for International Security, Gateway House examines how ‘dark net marketplaces’ have emerged from the shadows to become the mainstay of online illicit activity in India and around the world. “These marketplaces have an average life span of one to one-and-a-half-years but ensure high quality of contraband and address customers’ grievances over quality, shipment and payment,” said Patil.

At present, digital black market activity in India is limited, but it is only a matter of time before it increases. A handful of India-based vendors are already on these sites, offering Indian opium and other contraband to customers in India and abroad. “These marketplaces threaten our national security as their offerings of contraband, malicious software and illegal services have lured organized criminal networks, terrorist groups and other non-state actors as a force multiplier for illicit activities. Digital black markets along with other online criminal activities, resulted in an economic loss of $4.2 billion to India alone,” added Patil.

Despite, frequent takedowns by law enforcement agencies in the West, these marketplaces have demonstrated resilience. India, with its emerging economy and sophisticated technology industry still lacks a comprehensive understanding of digital black market activity and necessary technological and forensic skills to deal with it. It is imperative for India to establish deeper cyber security cooperation with like-minded countries. Canada, a global leader in Artificial Intelligence and cyber forensics, can be one such partner. As heterogeneous democracies, India and Canada can step up their cyber cooperation with a focus on tackling
digital black markets. A new paper from Gateway House published in collaboration with Centre for International Governance Innovation, a leading Canadian think tank, shows how both countries can join hands to counter this threat.

The paper recommends the following:
• National level: India has implemented multiple steps to address the growing cyber
threats, but Indian security agencies need to develop offensive cyber capabilities
specifically to take on the digital black markets.

• Bilateral level: India and Canada can work together to discredit these market places
through “Sybil attacks” and lemonising, with the aim not just of putting them out of
business but of tarnishing the reputation of potential successor market places.

• Multilateral level: The two countries can shape new international agreements
dealing with specific dimensions of online black-market activity and amend existing
ones such as the Arms Trade Treaty. This should include a focus on non-state actors,
in particular in small arms.

A research paper, ‘Partnering for Prosperity: India-Canada Collaboration to Curb Digital Black
Markets’ was written in partnership with Centre for International Governance Innovation,
Canada as part of the Track 1.5 Dialogue.