A VERY ‘REAL’ PROB­LEM

Ven­dors are find­ing it ex­tremely dif­fi­cult as coun­ter­feit and pi­rated prod­ucts look­ing ex­actly like the real ones, are flood­ing the mar­ket. They are en­gag­ing var­i­ous law en­force­ment agen­cies to tackle the prob­lem

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Fake, phony, coun­ter­feit, bo­gus, copied, fic­ti­tious, forged, pseudo, pi­rated, grey, sham, looka­like, im­i­ta­tion and many more words are can be used to de­scribe coun­ter­feit prod­ucts. The mar­ket for re­verse en­gi­neered or fake prod­ucts has in­creased to hun­dreds of bil­lion dol­lars and has grown at a large scale in last two decades. This busi­ness is ram­pant in In­dia and is caus­ing a colos­sal rev­enue loss to the en­tire busi­ness ecosys­tem.

UN­DER­STAND­ING COUN­TER­FEIT­ING

A typ­i­cal dic­tio­nary def­i­ni­tion states “To coun­ter­feit is to sell or mar­ket a non-gen­uine prod­uct as a gen­uine.” In a generic sense, such prod­ucts are sold un­der the name of renowned brands or com­pa­nies and an un­wary con­sumer s mis­led to be­lieve that the prod­uct orig­i­nates from the same man­u­fac­turer or ven­dor. When an in­di­vid­ual deals in such a sham it is noth­ing but cheat­ing a cus­tomer and mak­ing the per­son be­lieve that he is buy­ing the orig­i­nal branded prod­uct from the same com­pany or braiters as a prime lo­ca­tion for the pro­duc­tion of coun­ter­feit goods both for do­mes­tic sales and ex­ports.

The In­ter­na­tional Cham­ber of Com­merce (ICC) sees an even big­ger prob­lem. When fac­tor­ing in the coun­ter­feit mar­ket within coun­tries, plus the value of pi­rated dig­i­tal ma­te­rial, the ICC es­ti­mates coun­ter­feit goods were worth $650 bil­lion in 2008. The ICC said that the cost of lost tax rev­enue and ad­di­tional wel­fare spend­ing due to coun­ter­feit goods was $125 bil­lion in de­vel­oped coun­tries alone. And 2.5 mil­lion jobs have been lost as a re­sult of fake prod­ucts. By 2015, ICC ex­pects the value of coun­ter­feit goods glob­ally to ex­ceed $1.7 tril­lion. That’s over 2% of the world’s to­tal cur­rent eco­nomic out­put.

On the other hand, as per the World In­tel­lec­tual Prop­erty Or­ga­ni­za­tion (WIPO), coun­ter­feit­ing busi­ness is cost­ing the global econ­omy more than US $100 bil­lion ev­ery year.

Ac­cord­ing to an es­ti­mate by the As­so­ci­ated Cham­bers of Com­merce and In­dus­try of In­dia (As­socham), based on a re­cent study, wide­spread sale of coun­ter­feit prod­ucts across var­i­ous sec­tors like elec­tronic goods, au­to­mo­tive com­po­nents, con­sumer durables, pharma, herbal medicines and cos­metic prod­ucts has be­come so alarm­ing as to cap­ture a mar­ket of ` 55,000 crore by 2013. On ac­count of the in­creas­ing sale of fake prod­ucts in the ab­sence of reg­u­la­tions, the rev­enue loss to the ex­che­quer would have ex­ceeded ` 5,000 crore for FY12.

“Delhi is the hub of coun­ter­feit prod­ucts as nearly 75 per cent of such prod­ucts orig­i­nate here. FMCG com­pa­nies face upto 45 per cent loss and an av­er­age loss of around 25 per cent in their mar­ket share of their well-known prod­ucts,” said D S Rawat, sec­re­tary gen­eral, As­socham.

“The to­tal sale of con­tra­band elec­tronic items, con­sumer durables, au­to­mo­tive compo-

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