FLUX OF FAKE GOODS

Will the new Con­sumer Pro­tec­tion Act make any dif­fer­ence?

Millennium Post - - FRONT PAGE - NANTOO BANERJEE

Brand In­dia is un­der threat. From life-sav­ing drugs to LED bulbs and FMCG prod­ucts, the mar­ket is flooded with fake and un­safe goods that don’t com­ply with qual­ity, price or safety norms. Many don’t carry even such manda­tory in­for­ma­tion as man­u­fac­tur­ers’ names, pro­duc­tion and ex­piry dates. Prices are not printed. They are of­ten pasted sep­a­rately on packs. While the lat­est study re­veal­ing mal­prac­tices in In­dia’s fast-grow­ing LED bulb mar­ket by in­ter­na­tion­ally-ac­claimed re­search firm Nielsen is prac­ti­cally mind-bog­gling, a KPMG re­port ear­lier on the coun­ter­feit FMCG mar­ket showed how easy it is to fake and mar­ket branded prod­ucts in In­dia. The Nielsen re­port said 76 per cent of LED bulb brands don’t com­ply with safety norms. Coun­ter­feit and smug­gled prod­ucts now ac­count for more than a fifth of the FMCG mar­ket. Go­ing by the FICCI-KPMG re­port, the size of the coun­ter­feit FMCG mar­ket at the end of 2014 stood at Rs 68,000 crore. This was around 65 per cent of the to­tal mar­ket of coun­ter­feit prod­ucts, which was worth Rs 1.05 lakh crore. This mar­ket has grown by at least 10 per cent over the last two years. At the end of 2014, the over­all FMCG mar­ket in In­dia was val­ued at Rs 3.2 lakh crore.

The FMCG mar­ket has dra­mat­i­cally changed in the past two years, fol­low­ing vig­or­ous mar­ket­ing by man­u­fac­tur­ers of Ayurvedic prod­ucts. The top lines of ma­jor FMCG play­ers, in ur­ban ar­eas, bar­ring ITC, failed to grow as per mar­ket ex­pec­ta­tion. How­ever, the coun­ter­feit mar­ket is show­ing growth as law en­force­ment re­mains weak and fraud­sters freely make in­roads into the mar­ket. Big FMCG com­pa­nies are known to work closely with law en­force­ment au­thor­i­ties to bring fraud­sters to task. Hin­dus­tan Unilever, Go­drej Con­sumer, Dabur and Emami are said to be en­gag­ing with the po­lice and gov­ern­ment at reg­u­lar in­ter­vals to con­duct raids and seizures. They take coun­ter­feit­ing very se­ri­ously as fake prod­ucts passed off as gen­uine brands cause a loss of busi­ness for the orig­i­nal man­u­fac­tur­ers. Some firms also work with pri­vate de­tec­tives. The KPMG re­port said the loss to the ex­che­quer as a re­sult of FMCG coun­ter­feit­ing is around Rs 27,500 crore, an­nu­ally. The lack of co­or­di­na­tion be­tween law en­force­ment au­thor­i­ties and aware­ness de­fi­ciency among con­sumers are considered to be a big chal­lenge.

The lat­est Nielsen re­port on light emit­ting diode (LED) bulbs sold in In­dia’s $1-bil­lion mar­ket said three- fourths of these bulbs do not com­ply with the gov­ern­ment’s con­sumer safety stan­dards. Based on a study of 200 elec­tri­cal re­tail out­lets across ma­jor ci­ties like Mum­bai, Hy­der­abad, Ahmed­abad and New Delhi in July, Nielsen found not only these prod­ucts are spu­ri­ous and riskier, but also the fact that the high­est num­ber of vi­o­la­tions had taken place in the na­tional cap­i­tal it­self. “The spu­ri­ous and non-branded LED prod­ucts are a se­ri­ous threat to not just the or­gan­ised and com­pli­ant mar­ket play­ers but also to the gov­ern­ment’s key pro­grams like Make in In­dia,” the re­port said. The Nielsen find­ings showed that 48 per­cent of LED bulb brands had no men­tion of man­u­fac­turer’s ad­dress and 31 per­cent did not have man­u­fac­turer’s name. The mar­ket is flooded with smug­gled China-made prod­ucts. “They (spu­ri­ous prod­ucts) also im­pact gov­ern­ment’s tax rev­enue col­lec­tions... de­feat in­vest­ment ob­jec­tives and go against the ‘ease of do­ing’ busi­ness phi­los­o­phy,” the Neilsen re­port said.

The sit­u­a­tion in the drugs and phar­ma­ceu­ti­cals mar­ket is equally alarm­ing, if not more since sev­eral of the branded prod­ucts com­prise life-sav­ing drugs. Some of these drugs are not only spu­ri­ous or fake but also sub­stan­dard. Ac­cord­ing to re­ports, one in ev­ery seven In­dian drugs is sub­stan- dard. Even re­puted brands fail to meet qual­ity stan­dards. Ex­perts be­lieve that more lu­cra­tive rou­tinely pre­scribed drugs are at higher risk of fail­ing qual­ity stan­dards as study pub­lished in the De­cem­ber 2015 is­sue of Jour­nal of Ap­plied Phar­ma­ceu­ti­cal Sci­ence, con­cluded, af­ter test­ing 32 sam­ples of di­clofenac sodium, a pop­u­lar painkiller. An­other study, pub­lished last year in the In­ter­na­tional Jour­nal of Phar­macy and Phar­ma­ceu­ti­cal Sciences, eval­u­ated 46 sam­ples of amox­i­cillin tri­hy­drate, a fast-mov­ing an­tibi­otic, had a sim­i­lar view. “We found a sub­stan­dard medicine in­ci­dence of 15.62 per cent for di­clofenac sodium and 13.04 per cent for amox­i­cillin tri­hy­drate,” said Ahmed Nawaz Khan, study co-au­thor and as­sis­tant pro­fes­sor, Depart­ment of Phar­macy, Jaypee Univer­sity of In­for­ma­tion Tech­nol­ogy, Solan.

The Cen­tral Drug Stan­dard Con­trol Or­gan­i­sa­tion (CDSCO), the of­fi­cial reg­u­la­tory au­thor­ity, how­ever, thinks that only around 4.5 per cent of drugs in the mar­ket are sub­stan­dard. In­de­pen­dent stud­ies by re­searchers to­tally dis­agree. They say the size of sub­stan­dard medicines in the mar­ket could be well over 15 per cent. Ac­cord­ing to WHO, these data have se­ri­ous im­pli­ca­tions on health in a coun­try where 58.20 per cent of the to­tal health ex­pen­di­ture is an out-of­pocket cost bur­den on peo­ple. In In­dia, medicines alone ac­count for nearly 77 per cent of health spend­ing.

Un­for­tu­nately, the Depart­ment of Con­sumer Af­fairs and its in­ves­tiga­tive agen­cies seem to have lit­tle con­trol over the sit­u­a­tion. The ex­ist­ing Con­sumer Pro­tec­tion Act 1986 has be­come prac­ti­cally ob­so­lete. For the last three years, the gov­ern­ment is try­ing to re­place the act with a new one. The bill, aimed at strength­en­ing the con­sumer pro­tec­tion mech­a­nism, is ready for place­ment in Par­lia­ment by the min­is­ter, Ram Vi­las Paswan. It will en­force con­sumer rights and pro­vide a re­dres­sal mech­a­nism for com­plaints re­gard­ing de­fect in goods, in­clud­ing fake and sub­stan­dard prod­ucts, and de­fi­ciency in ser­vices. The main ob­jec­tive of the bill is to estab­lish a mech­a­nism for con­sumer pro­tec­tion.

It pro­poses to have Con­sumer Dis­pute Re­dres­sal Com­mis­sions at the district, state and na­tional lev­els. Also, it seeks to form a Con­sumer Pro­tec­tion Au­thor­ity to in­ves­ti­gate con­sumer com­plaints. How­ever, nei­ther the ma­jor pro­duc­ers nor dis­creet con­sumers are sure if the new act, when passed, will rad­i­cally change In­dia’s multi-bil­lion­dol­lar fake and un­safe con­sumer goods’ mar­ket. (The views ex­pressed are strictly per­sonal.)

The FMCG mar­ket has dra­mat­i­cally changed in the past two years, fol­low­ing vig­or­ous mar­ket­ing by man­u­fac­tur­ers of Ayurvedic prod­ucts. How­ever, the coun­ter­feit mar­ket is show­ing growth as law en­force­ment re­mains weak and fraud­sters freely make in­roads into the mar­ket

There is an ini­tia­tive un­der­way to estab­lish a mech­a­nism for con­sumer pro­tec­tion (Rep­re­sen­ta­tional Im­age)

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