40% of auto parts sold are fake

Despite many crackdowns, the fake automobile parts market is thriving in India — at least two in every five spare auto parts sold are fake.

The Automotive Component Manufacturers Association (ACMA) has estimated the value of fake spare parts in the after-market at Rs 10,500-14,000 crore, against about Rs 8,500 crore three years ago. The valuation of fake spare parts accounts for about 30-40 per cent of the overall after-market for spares (in retail outlets), estimated at about Rs 35,000 crore (as of March-end).

Counterfeit parts are most common in the case of clutch, filter lamps, wipers, bearings, steering arm, as well as life-saving parts such as brakes and brake linings. Fake parts are not only rampant in the case of cars and sports utility vehicles, but are equally popular for trucks, buses and two-wheelers, as these are priced 20-30 per cent cheaper.

Harish Lakshman, president of ACMA, said, “India does not have mandated safety standards for after-market products; as a result of which import of counterfeit products cannot be checked…Unfortunately, it is not possible to quantify the production in the unorganised sector and the trading of counterfeit goods, as much of it remains unreported, undetected and unnoticed.”

Owing to the ease of manufacturing, packaging and importing these products and the higher margins on the sales of counterfeits, retailers and mechanics prefer these. The short replacement cycles of some parts, supply constraints faced by original component manufacturers and legal shortcomings are driving the burgeoning fake parts market.

An ACMA note said about 20 per cent of all road accidents in India could be either directly or indirectly attributed to the use of counterfeit automotive parts. In 2012, India recorded 490,383 road accidents, with fatalities standing at 138,258.

The fake parts market is also leading to a huge loss for the government — it is losing about Rs 2,200 crore a year in tax revenue, as none or only a few fake parts come within the country’s tax framework.

Car manufacturers complain the use of fake parts impacts a vehicle’s performance and, consequently, its brand value. Now, a few manufacturers, backed by local police, have started conducting raids in this regard. City-based Tata Motors, for instance, raided the premises of 33 producers of fake spare parts. These manufacturers were selling their products under the ‘Tata Genuine Parts’ brand in Maharashtra.