The Problem of Fake, Counterfeit & Piracy
Indian metros have become bases for manufacturing counterfeit products and account for maximum IPR violations. Delhi is the hub of counterfeit products in India as nearly 70 per cent counterfeit products originate there. The loss of revenue to the Indian exchequer by way of taxes to be roughly around Rs 1,000 crore a year. FMCG, software, medicines, automobile, packaged water, and garments sectors are the most affected by IPR violations, though there are laws in India against counterfeiting, their enforcement is tedious. Lengthy legal proceedings often yield no results Indian courts are becoming aware of the need for the Judiciary to develop progressive and novel methods of granting relief to check infringers and counterfeiters.
Nearly 22% of packaged food is lost to the grey market. This segment is most vulnerable as low quality and cheap duplicates are easy to produce posing a serious health hazard. So do fake dietary supplements whose booming market is expected to double to $4bn by 2020. Vitamins, minerals and herbal supplements account for a huge 70% share of the total market.
Similarly, rising demand for deep discounted cosmetic products is leading to a spurt in counterfeit products many of which come with import tags and high levels of chemicals.
Medicines & Drugs
The World Health Organization (WHO) and the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) describe counterfeits as drugs that have been falsely labeled regarding their identity and/or origin to deliberately fool consumers. Fake medicines market forms a big portion of India’s domestic drug market, and it is one of the highest growing markets in the country. What’s more, the biggest centre of spurious drugs is national capital region (NCR), which includes Delhi and its suburbs of Gurgaon, Faridabad and Noida. Estimates indicate that fake medicines constitute nearly one-third of all drugs sold in NCR.
The shocking revelation has been made in a paper, Fake and Counterfeit Drugs In India’s booming business, by industry body ASSOCHAM. The paper shows that fake drugs constitute US$ 4.25 billion of the total US$ 14-17 billion of domestic drugs market. If the fake drugs market grows at the current rate of 25%, it will cross US$ 10 billion mark by 2017, according to the paper.
Fake drugs were found to be available as popular medicines like Crocin, Voveran, Betadine, injections of calcium and syrups like Cosavil. The paper highlighted that around 25% of India’s drugs are fake, counterfeit or substandard.
What drives trade in fake drugs is lack of adequate regulations, shortage of drug inspectors and a lack of lab facilities to check purity of drugs, adds the paper. It says the other key factors include storages of spurious drugs by the chemists, weaknesses in drug distribution system, lack of awareness among consumers and lack of law enforcement.
Other than the NCR, concentration of fake drugs was found to be present in Bahadurgarh, Ghaziabad, Aligarh, Bhiwadi, Ballabhgarh, Sonepat, Hisar and Punjab. Agra is also increasingly becoming a hub for fake drugs in India, adds the paper.
Milk & Dairy Products
FSSAI (Food Safety and Standards Authority of India) revealed a shocking fact that 68.7 per cent of milk and milk products sold in the country are not as per the standards. This means that your milk has high chances of adulteration or the milk you are consuming every day might be fake.
The most common adulterants used to develop fake milk include detergent, caustic soda, glucose, white pain and refined oil. The Animal Welfare board has stated that the adulterants used in milk can be hazardous to health and may cause irreversible damage to organs. One of the biggest reasons cited for the growth of counterfeit milk industry is the ever-increasing demand for milk. According to some estimates, the demand for fluid milk is four times the production. To fulfil this gap milk suppliers and companies resort to adulteration.
According to a government data, demand for milk is increasing rapidly in the country. This is primarily due to increasing population and growing incomes accruing from the multitude of central schemes launched for livelihood and employment generation. If we go by the emerging trend, the demand for milk is likely to be about 155 million tonnes by the end of 12th Five-year Plan (2016-17) and in the range of 200-210 million tonnes in 2021-22. Annual average increase in the production of milk over the last 10 years has been around 3.5 million tonnes per annum whereas there is a need to reach an average of 6 million tonnes per year over the next 12 years to meet the ever-increasing demand.
The mammoth demand for fluid milk will pose a challenge for the government and top milk suppliers, amidst this scenario there are high chances that you will be sold fake or highly adulterated milk.
Grocery & Foods
Food is adulterated to increase the quantity and make more profit. In India normally the contamination & adulteration in food is done either for financial gain or due to carelessness and lack in proper hygienic condition of processing, storing, transportation and marketing. This ultimately results that the consumer is either cheated or often become victim of diseases. Such types of adulteration are quite common in developing countries or backward countries. According to the Journal of Food Science, Olive oil, milk, honey, saffron, orange juice, coffee and apple juice are the seven most likely food ingredients to be targets for intentional or economically motivated adulteration of food.
1. Milk
Milk is possibly one of the easiest targets and that’s why you’ll find hundreds of cases where food authorities or independent food testing agencies have found milk to be adulterated. A study conducted by the FSSAI across 33 states found that milk in India was adulterated with diluted water, detergent, fat and even urea. Some of the adulterants that are used in milk are water, chalk, urea, caustic soda and skimmed milk, while Khoya is adulterated with paper, refined oil and skimmed milk powder.
2. Honey
Honey is often adulterated with water and table sugar to increase the bottle’s quantity. According to a study carried out by the Centre for Science and Environment, most honey brands being sold in the country contain varying amounts of antibiotics and their consumption over time could induce resistance to antibiotics, lead to blood-related disorders and injury to the liver.
3. Spices
spices like turmeric powder is also adulterated with “metanil yellow”. Metanil yellow is produced with utilizing some raw materials like metanilic acid and diphenylamine. The common people do not know the risk of consuming turmeric powder mixed with “metanil yellow”. It is purely carcinogenic means it is capable of causing cancer in living tissues. In black pepper adulterant is Papaya seeds (used to add bulk).It’s harmful effect is that Papaya seeds can cause serious liver problems and stomach disorders. Chilli powder is often adulterated with a similar looking substance like brick powder.
4. Ice Cream
In ice Cream adulterant is pepperonil, ethylacetate, butraldehyde, emil acetate, nitrate, washing powder etc. are not less than poison. Pepperoil is used as a pesticide and ethyl acetate causes terrible diseases affecting lungs, kidneys and heart. Ice cream is manufactured in extremely cold chamber where fat is hardened and several harmful substances are added. Also a kind of gum is added which is sticky and slow melting. This gum is obtained by boiling animal parts like tail, the nose, the udder etc.
5. Food grains and Flour
The rice and wheat is a part of our staple food in India. The powdered rice and wheat is usually adulterated with starch. This is done to thicken the cream. This added substance takes away the nutrition intended for the consumer leaving us under the illusion that our diet is perfect. Rice is being adulterated with small grains of stones to increase the overall weight per quintal by unscrupulous retailers.
6. Coffee powder
The coffee powder usually adulterated Tamarind seeds, chicory powder (used to add bulk and colour).It’ss harmful effect is that it can cause diarrhea, stomach disorders, giddiness and severe joint pains.
7. Tomato sauces
Tomato sauces mostly used in local fast food centres in numerous areas of West Bengal, are also artificially made from ‘pumpkin pulp, sugar, non-edible colours and flavours. No tomato is present in that sauce to maintain very cheap rate in the local market. These sauces with artificial colours and flavours are highly carcinogenic. These are being supplied rampantly without the checking of the health department.
8. Tea Leaves
Tea leaves are often adulterated with chemicals and additives that add to its aroma or flavour. Many substances have been used to adulterate tea. Ordinary substances for adulterating tea include, but are not limited to: Prussian blue a nonsoluble, blue pigment commonly used to color blueprints, crayons, paintings, and paint; it is non-toxic to humans. Indigo a blue dye derived from the Indigofera tinctoria plant; it is non-toxic to humans. Graphite (Plumbago) — a naturally occurring mineral that is a form of carbon; commonly used as the lead in pencils. Gypsum a soft, naturally occurring mineral; used to alter color of tea
9. Vegetable Oils and Ghee
In Mustard seeds and mustard oil adulterant is Argemone seeds (used to add bulk and weight). Papaya seeds (used to add bulk)that the consumption of these could cause epidemic dropsy and severe glaucoma. Young children and senior citizens with poor immunity are more susceptible this. According to a food website report 70% of the olive oil sold is adulterated with cheaper oils. The most common form of adulteration comes from mixing olive oil with cheaper, lower-grade oils. Sometimes, it’s an oil from an altogether different source like canola oil or colza oil. Other times, they blend extra olive oil with a poorer quality olive oil.
10. Diwali Sweets
Khoya and Chhena are commonly used for the preparation of traditional Diwali sweets, and are often adulterated with starch. All you need to do is boil a small sample in water, cool it then add a few drops of iodine solution. A blue color indicates the presence of starch. Silver coating (vark) used to decorate sweets is made from silver. According to Indian regulations, silver must be 99.9 per cent pure if it is used as a food ingredient. However, with silver becoming expensive many sweet shop owners use silver vark that could contain aluminium.
Baby Care Products
Indian metros have become bases for manufacturing counterfeit products and account for maximum IPR violations. Delhi is the hub of counterfeit products in India as nearly 70 per cent counterfeit products originate there. The loss of revenue to the Indian exchequer by way of taxes to be roughly around Rs 1,000 crore a year. FMCG, software, medicines, automobile, packaged water, and garments sectors are the most affected by IPR violations, though there are laws in India against counterfeiting, their enforcement is tedious. Lengthy legal proceedings often yield no results Indian courts are becoming aware of the need for the Judiciary to develop progressive and novel methods of granting relief to check infringers and counterfeiters.
Nearly 22% of packaged food is lost to the grey market. This segment is most vulnerable as low quality and cheap duplicates are easy to produce posing a serious health hazard. So do fake dietary supplements whose booming market is expected to double to $4bn by 2020. Vitamins, minerals and herbal supplements account for a huge 70% share of the total market.
Health & Personal Care
Rising demand for deeply discounted cosmetic products is leading to a spurt in fake items, many with import tags, which not only violate intellectual property rights but also pose serious health risks, warn industry players. Amid rising disposable income, especially among the younger generation, and increasing penchant for grooming products, the market for cosmetics is a lucrative one. On the flipside, the grey market for cosmetic products too is estimated to be worth millions of dollars. The grey market products bring ‘brand dilution’ with them. These products attract unsuspecting customers because of the import tag and pricing. Due to heavy discounts, pricing becomes a decisive factor for buying grey market products. Majority of fake cosmetic products are coming from China while a small percentage of them are manufactured locally. Using fake cosmetic products can sensitise your skin and when exposed to the sun, it can cause skin problems like contact dermatitis and irritant dermatitis (if the amount of chemical is more than normal). Such chemicals block the skin pores which can lead to acne, continuous use can lead to premature ageing also. A heavy metals like zinc and lead are present in most of the cosmetics in little amount but when added in excess, they can cause damage to the whole body.
Cosmetics & Beauty
Fake cosmetic goods bearing the name of branded products may have filled the market if the report of the Directorate of Revenue Intelligence is believed. Sources said the fake products were imported from China.
Agricultural
It is estimated that almost 25 percent of the pesticide, seeds and fertilizer market in India is counterfeit or illegal. Given Indian farmers spend $125 million on pesticides every year, a significant figure is likely spent on illegal products that undermine stewardship efforts across the country. According to a report from the Indian Chamber of Commerce, the use of ineffectual, illegal products leads to the loss of 10.6 million tons of food per year. Meanwhile, exporters fear the use of counterfeits will threaten India’s position as one of the world’s leading grain exporters worth $26 billion a year due to traces of illegal products found on shipments.
Home, Kitchen & Electrical Appliance
About 20% of mobile phones sold in India are fake. These phones emit harmful radiations and contain very high levels of Lead and Cadmium. Besides substandard and uncertified batteries and chargers carry the additional risk of catching fire due to short circuits. Ironically, the country’s national capital is the main transit point for the sale of black market goods and contributes a massive 75% to the flourishing fake goods industry
Counterfeiting has always been a convoluted concern for the Indian as well as Global economy. The Indian markets particularly the street shops are flooded with countless counterfeit goods, and owing to comparatively lower price of such goods, Indian customers are easily fascinated by them. The USTR (United States Trade Representative) Report in 2015 stated that India ranked first in terms of number of nominated physical markets with an increase in reports of counterfeit apparel and footwear. On account of extensive trade of counterfeit goods, even in 2016 India features in the priority watch list of USTR Special 301 Report.
Apart from adversely affecting the brands and the public in general, counterfeiting also has a perturbing effect on the economy. Studies also suggest that IPR infringements are an important source of income for organised criminal groups. These groups are also often engaged in other crimes, such as drug trafficking, excise fraud, human trafficking or money laundering. Here it would be germane to delve into Indian Laws and precedents which prohibit counterfeiting and extend protection to brands against this illicit trade.
As per an estimate the direct loss to FMCG industry due to counterfeit products is more that Rs 200 million every year. A survey was conducted to estimate the size of counterfeit of FMCG products and it revealed the stark reality of FMCG companies having maximum loss upto 40% and an average loss around 20% of their market share of their well known products.
Automobile Parts
The spiraling growth of Indian automobile industry has also led to an increase in the notorious counterfeiting business. Every year, the country bears a taxation loss of approximately Rs 2700 crore as spurious parts make Rs 11,000 crore of the Rs 40,000 crore Indian auto component market. Despite government checks, this parallel illegal industry is growing at an alarmingly pace.
The most common among these fake parts include clutch, filters, lamps wipers, bearings, steering arms, brakes and brake linings and are available for a range of vehicles including two-wheelers, cars, SUVs and commercial vehicles (trucks and buses). Some of the parts in this list are critical for the safe operation of vehicles. ACMA has claimed that about 20% of the total road accidents in the country could be caused by the use of counterfeit parts.
Tobacco & Alcohol
Alcohol abuse is emerging as a major public-health problem in the country.
Educational-books-and-stationary
India’s growing passion for reading is matched by a growing trend of publication of pirated books, threatening creation of intellectual capital while disseminating poor content among readers, including school children. The report on Socio-Economic Impact of Piracy in the Publishing Sector, conducted by the Confederation of Indian Industry, suggests pirated books accounted for about 20 per cent of the sales in the domestic market in 2011-12. The level of piracy was 17 per cent in 2007-08.
The piracy level in academic book publications is estimated to be around 12-15 per cent. For the non-academic publishing segment, the piracy levels are estimated at 22-25 per cent.
Book piracy in India depends on two factors primarily. Firstly, the price of the book and secondly on its popularity. According to a study conducted by Ministry of HRD, Govt. of India, there are three types of print piracy prevalent in the country.
The most popular and prevalent type is reprinting a book illegally. The second type of book piracy falsely uses the name of famous authors and the third type of pirated book is to produce the translated versions of foreign language books in other languages. The book pirates do pay taxes on the generated profits and revenues and therefore, the authors do not get any royalty.
Book piracy in India also exists in the form of mass photocopying, especially around the schools, colleges and universities. Book piracy is becoming a lucrative business day-by-day as not only the text but the book design, cover, colour and even barcodes and holograms are also copied in order to dupe the readers.
Intellectual Properties
Intellectual-properties IP theft involves robbing people or companies of their ideas, inventions, creative expressions.