ACMA cracks down on fake parts makers

As the auto-component replacement market is infested with Rs 8,700 crore worth counterfeit parts, Auto Component Manufacturers’ Association of India (ACMA) has decided to strengthen its clean up act as it plans to conduct over 500 raids this year to seize such counterfeits.

While the total market for autocomponents in India is around Rs 990,000 crore ($22 billion), components aftermarket constitutes around 25 per cent of the total market, which is valued at Rs 24750 crore ($5.5 billion), according to data available with ACMA. If labour cost is also added to the component aftermarket, the size touches Rs 33000 crore. Counterfeits comprise 35 per cent of the autocomponents, valued at Rs 8,700 crore.

 

"Considering a 10 per cent excise duty and other taxes at 15 per cent, the net loss to the government exchequer is to the tune of Rs 2200 crore.", informed Srivats Ram, vice-president, ACMA. He added that use of counterfeits led to nearly 25,400 deaths and 93,000 injuries in 2009 that are either directly or indirectly attributable to fake parts. Besides, an estimated 109 million litres of additional petrol and approximately 8 million litres of additional diesel are attributed to use of counterfeit parts together with a loss of over 1.15 million jobs, Ram informed.

Commonly found counterfeit parts are filters, bearings, steering arms, tie rods, brakes and brake linings, bumpers, alternators, wipers and lamps. And thanks to tax evasion and lack of quality control, the fake parts manufacturers can afford to sell these components cheaper by around 10-60 per cent compared to original parts. And a significant portion of these actually come from China. "More than 50 per cent of the counterfeit parts come from China.", claimed Ram.

A spare parts seller near Lal Darwaja in Ahmedabad said, "Chinese parts are in high demand for things like headlamps, wipers,bumpers etc as they are significantly cheaper than the original ones. Most people would opt for a Chinese part knowing very well that it is a counterfeit only to save money."

However, in case of safety critical parts like bearings, brake parts, steering arms, alternators etc, counterfeiting can lead to accidents. Executive director ACMA, Vinnie Mehta said," Around 20 per cent of all road accidents in India happen due to use of counterfeits other than sub-optimal performace. Besides, it also is a huge blow to the reputation of established brands apart from revenue loss that they incur." ACMA now feels that in case of safety critical parts, we should now push for adequate homologation to ensure safety. Apart from the Motor Vehicles Act, certifying agencies are ideally positioned to address the problem, says ACMA. The industry umbrella body is now planning to persuade the government to make counterfeiting of autocomponents a cognizable and non-bailable offense. "There needs to be a law that covers the entire spectrum of spurious autocomponents, especially those related to manufacturing, packaging as well as selling. The current laws do not provide for 'suo moto' action by government or government agencies.", Ram said.

ACMA is taking a two-pronged approach to counter the menace. It is also taking the route of using investigative agencies to crack stock points as well as printing, packaging and manufacturing points of such spurious parts. "We are working along with the police to crack down on such points. We have already conducted around 450 raids in the last 18 months, and this year we want to conduct at least 500 raids across the countries.", Ram explained.