Loss from counterfeiting around Rs 5,000 cr: report
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 Rs 55,000 crore by 2013, according to an estimate by the Associated Chambers of Commerce and Industry of India (Assocham) based on a recent study.
On account of the increasing sale of fake products in the absence of regulatorions, the revenue loss to the exchequer would have exceeded Rs 5,000 crore for fiscal 2011-12.
“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 components, pharma, herbal medicine and cosmetic products, based on Assocham estimates for fiscal 2011-12 is Rs 25,000 crore. The present sale of fake products is around Rs 45,000 crore, he added.
The other areas in which spurious products reign supreme are vegetable oils, spices, ghee and even watch components. In these areas of large economic activities, the sale of fake products has been estimated to be in the range of Rs 15,000 crore.
In a paper on ‘Fake Products Sale’, prepared by Assocham, it has stated that electronic, consumer durables and pharma sectors have witnessed the highest sale of fake products with an estimated value of Rs 20,000 crore in the present fiscal.
In pharma sector, fake medicines were sold in rural and semi-urban markets and the cost of this works out to about Rs 12,000 crore and is seeing a growth of over 100 per cent.
The chamber estimates point out that Rs 8,000 crore worth of fake products were sold including vegetable oils, ghee, spices and watch components by 2011-12, of which the largest chunk came from the sale of watch components which has been estimated at Rs 5,000 crore. The genuine manufacturers of watches have lost out heavily because of the huge price differential, the study said.
Herbal medicine and cosmetics sector alone registered a sale of Rs 10,000 crore in 2011-12.
The biggest concern is, however, the customers attraction towards these pirated products which are sold 40-45 per cent below the price of the original. A common man with limited knowledge falls for the counterfeit products due to its cheap prices.
Enforcement of laws against counterfeiting is not so strict in India which is another big jolt for the brand industry, the study adds.
Recently, Dubai authorities also seized $1.09 million in counterfeit electric goods as part of a recent crackdown which included fake goods from leading brands LG, Panasonic, Sony, Sharp and Hitachi. The seized goods weighed about 120 tonnes and included 5,300 TV sets, 7,000 DVD players and various other household devices.
The laws at present hardly provide for effective deterrence either by way of monetary penalties, damages or criminal prosecution.
Assocham has called for the government to immediately implement bar coding on medicines and electronic items to control fake products.