Counterfeiting is a major problem for the Indian economy, with an estimated $150 billion in annual losses. The pervasive issue affects many industries, including fashion, electronics, and pharmaceuticals. It causes serious financial losses, and damage to brands, and potentially poses a risk to public health and safety. The Indian government has adopted a multifaceted strategy that includes public awareness programmes, legislation, and enforcement tools to address this complex issue. Nevertheless, developing and improving future strategies requires a rigorous and nuanced assessment of their efficacy in various businesses.
Although the Intellectual Property Rights (IPR) Act 2000 serves as the foundation for India’s anti-counterfeiting legislation, its efficacy is contingent upon the vulnerabilities unique to each industry. For example, the Central Drugs Standard Control Organisation’s (CDSCO) strict regulatory oversight is beneficial to the pharmaceutical industry. Nonetheless, more stringent oversight and focused public education initiatives are required due to online counterfeiting and low consumer awareness. Likewise, the effectiveness of industry bodies such as the Apparel Export Promotion Council (AEPC) in promoting trademark protection underscores the efficacy of collaborative efforts in the apparel sector. Issues like intricate supply chains and budget-conscious customers, however, necessitate consistent efforts to encourage ethical sourcing through programmes like the Sustainable Apparel Coalition (SAC) and address the issue of grey markets.
Due to supply-demand imbalances, supply chain leaks, and other weaknesses including high drug prices and insufficient healthcare, India’s internationally recognised pharmaceutical sector also attracts counterfeiting. According to our consumer survey, 25% of participants voluntarily choose to use counterfeit medications since they are more affordable and readily available than authentic medicines. Government policy action can be a key element in the fight against counterfeiting in such situations. The good news is that, in an effort to combat counterfeiting and guarantee traceability, the government of India has mandated the top 300 pharmaceutical brands to have QR codes. It is essential to integrate physical and digital security measures, such as barcodes and QR codes with tamper-evident seals, to safeguard the whole supply chain.
When it comes to looking into and prosecuting incidents of counterfeiting, the Department of Industrial Policy and Promotion (DIPP) and the police have essential roles to play. Police departments now have more specialised Intellectual Property Units (IPUs), which have improved enforcement, especially in industries like electronics and automotive components. However, limited resources and inadequate enforcement personnel often hamper efforts. It is essential to make investments in human resources, specialised training in fields like digital forensics and online investigations, and enhanced inter-agency cooperation between central and state authorities. Additionally, information exchange and coordinated action against cross-border counterfeiting networks can be facilitated by cooperation and data sharing among enforcement agencies, industry associations like the Federation of Indian Chambers of Commerce and Industry (FICCI), and giant online retailers like Flipkart and Amazon.
Bridging the Gap
One of the most significant challenges lies in bridging the knowledge gap among consumers regarding the risks associated with counterfeit goods. While initiatives like the National IPR Policy 2016, emphasise public awareness campaigns, their reach and effectiveness often fall short. Tailored campaigns targeting different demographics and utilising diverse communication channels like online platforms, social media, and community outreach programmes, in collaboration with NGOs and consumer protection organisations, are essential. Partnerships with influencers and educational institutions like Indian Institutes of Management (IIMs) can further amplify the message and encourage responsible consumer behaviour by emphasising the quality, safety, and ethical sourcing aspects of genuine products.
The rise of e-commerce platforms poses unique challenges due to the anonymity and ease of operation they provide to counterfeiters. While initiatives like mandatory registration of importers and increased vigilance at customs have yielded positive results in the electronics sector, effective collaboration with major e-commerce platforms is crucial. Implementing robust takedown mechanisms, leveraging data analytics to identify suspicious activity based on purchase patterns and product listings, and promoting transparency through seller verification processes (such as mandatory display of brand authorisation certificates) are critical steps. Additionally, exploring the potential of emerging technologies like blockchain can revolutionise product tracking and verification, and can result in enhanced transparency and consumer confidence. Blockchain-based platforms can create tamper-proof, digital ledgers that track a product’s journey from the factory to the consumer.
Strategies to Fight Counterfeiting
A one-size-fits-all strategy is the antithesis of what is required when it comes to fighting counterfeiting. Some industry-specific key examples are:
Pharmaceuticals: Spurious pharmaceuticals pose a threat to public health as well as brand reputation. Strengthening regulatory procedures at both the manufacturing and distribution stages, coupled with stringent penalties for violators, is crucial. Additionally, exploring track-and-trace systems using blockchain technology, as envisioned by the National Institute of Pharmaceutical Education and Research (NIPER), can enhance drug traceability and curb online counterfeiting.
Apparel: Promoting ethical sourcing practices through transparency initiatives like the Fashion Revolution’s Transparency Index and incentivising responsible suppliers through schemes like the Sustainable Apparel Coalition’s Higg Index can help curb the grey market. Additionally, collaborating with online marketplaces like Myntra and Ajio to implement stricter product verification procedures like mandatory brand authorisation checks and educating consumers about the harmful impact of counterfeit apparel on social and environmental sustainability through targeted campaigns can be impactful.
Electronics: Mandatory standardisation of key components, coupled with robust quality control measures during import, can significantly reduce the influx of counterfeit electronics goods. Additionally, promoting consumer awareness about the safety risks associated with using fake components through platforms like the Consumer Electronics and Appliances Manufacturers Association (CEAMA) website and empowering them to verify product authenticity through QR codes or other digital solutions like the government of India’s ‘mParivahan’ app can contribute to a safer automotive ecosystem.
Automotive Parts: Establishing clear guidelines for authorised distributors and repair shops along with regular inspections and stringent penalties for non-compliance, can deter the use of counterfeit auto parts. A safer automotive ecosystem can also be achieved by educating consumers about the possible safety risks posed by fake parts through targeted campaigns run by the Society of Indian Automobile Manufacturers (SIAM) and by supporting authorised service centres through programmes like Maruti Suzuki’s ‘Genuine Parts’ campaign.
Effectively combating counterfeiting requires a constant assessment of current regulations and their implications for particular industries in times to come. Despite the fact that India has achieved progress with its multifaceted strategy, resolving the issues outlined above is essential for further progress. How effectively we are able to suppress counterfeiting will depend mostly on how well we modify our tactics to industry-specific requirements, and how well we adapt to rapidly evolving technology know-how of counterfeiters in terms of bolstering enforcement capabilities, raising consumer awareness, and wisely using technology. Only through a shift from a siloed strategy to a cooperative, technology and data-driven one, can India successfully address the issue of counterfeiting and provide a level-playing field for all parties involved in commerce.
