Make and Protect in India

An article that tries to showcase the 'Menace of the Fakes' and its repercussions in the market, as well as the society. An informed example of the industry has been used to make the point.

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-Dhruv Madan

Are fake products a big menace to the society? Are fake products hampering the economy and consumers? Has the Government done anything in tackling the problem?It is the unfortunate state of our time that we are seeing these ‘Fake’ or ‘Counterfeit’ products expand their presence to unbelievable levels in the market. This looked-down-upon part of the market is generating revenues to the tune, similar to that of the mainstream market. The list of products that have essentially been ‘faked’ or ‘pirated’ is endless, and this has been a case of great negligence of sorts on our part. However, it is time to acknowledge and understand what has now become a grave threat to the market, and the society at large.The economic and consumer consequences of counterfeiting, piracy and smuggling are numerous and significant. While the economic impacts are difficult to quantify, a recent market study by the Federation of Indian Chambers of Commerce and Industry (FICCI) looked at seven industry sectors most impacted by counterfeiting, piracy and smuggling, and found almost Rs 73,000 Crores in lost sales in 2012 across just these seven sectors. The FICCI study showed that nearly 30% of the automobile components market in India is counterfeit. (Ref. Counterfeiting, Piracy and Smuggling in India-Effects and Potential Solutions)Although the study was conducted a while ago, it is only certain these figures have risen, owing mostly to the inaction by the authorities.

A major example, taken for this paper, was the ‘Automotive Aftermarket’, which has become a very easy target for these illicit activities. This market segment entails the manufacture, distribution and retailing of components, parts and accessories that are used in the repair and modification of motor vehicles. Duplicates are often used in the after-sale market because of their low costs and visual similarity. In cases where manufacturers outsource production of components, certain production overruns of legitimate parts find their way to the grey market, being sold alongside counterfeit, recycled, or stolen goods. The mixed sale of unauthorized “legitimate” goods and counterfeits makes it difficult to control the market and differentiate legal from illegal items.(Ref. Counterfeiting, Piracy and Smuggling in India-Effects and Potential Solutions)The use of counterfeit automotive parts has a severe human cost. Counterfeit items adversely impact the functioning of vehicle safety devices; indeed, around 20% of total road accidents in India is estimated to be directly or indirectly attributed to the use of counterfeit automotive parts. Moreover, there are economic costs to consumers: studies show that the use of counterfeit parts costs domestic end-users an additional 109 million litres of petrol and 8 million litres of diesel every year. The Indian Automotive Industry has witnessed unprecedented growth in its recent years; yet we can’t help it when it comes to being bogged down by the evils of greed and corruption.But there’s always a road forward; and we can see that from the recent efforts of our government. An enforced Intellectual Property (IP) framework and registration system, as part of the National IP Strategy Plan, is only the first step towards tackling this issue. More than the implementation of new laws, it is the enforcement of these laws that needs to be improved upon. It is a fact that the police DOES NOT treat commercial crimes at a small level with the same priority with which it would treat other crimes. A reason for this could be the underfunded IPR units within the state police departments; the absence of a dedicated IPR enforcement unit at national level adds to the problem as well. Another obstacle is that the quality of enforcement varies from region-to-region, a notorious reputation to have for a democratic nation. There’s no need to mention the over-burdened state of our legal system.If the country can rise from these problems to successfully tackle the ‘menace of the fakes’, it’ll go a long way in sending the world a strong message. A message to show everyone that India is open for business and that everyone will get a fair deal. Idealistic or not, it is something that concerns the whole nation and deserves to be talked about at the highest of the platforms. The nation and its leaders talk about “Make in India”, but how about “Make and Protect in India”? A meaningful question, if you ask me.

 

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