One of the latest threats facing the global manufacturing industry is the presence of spurious/substandard in the market. The World Health Organization (WHO) estimates that counterfeit account for approximately 5-8% of the total worldwide trade inmanufacturing. According to the WHO, 'a counterfeit product is one which is deliberately and fraudulently mislabeled with respect to identity, composition, and/or source.' This definition of counterfeit includes not only completely fake product but also those that have been tampered with, adulterated, diluted, repackaged, or relabeled so as to misrepresent the dosage, origin, or expiration date, as well as those substandard product that are cheaply produced in order to make unlawful profits.

Reports show that substandard product are available in the market worldwide. These reports are not only from the poor or developing countries but also from the developed world. However, this problem is much more severe in developing countries than in countries such as the US, UK, Canada, and other industrialized countries. In 2000, the health ministry in Russia reported that 56 drugs were counterfeit. The following year, approximately 3.6% of all pharmaceuticals in Russia were found to be fake. The United States Food and Drug Administration (US FDA) reported that in spite of stringent controls, the number of cases of counterfeit drugs had increased in 2001 compared to the number of cases five years earlier.

Introduction of spurious products

Spurious product are those product which have a look like name identity, color, pattern, design and could have same identical name .They are counterfeit or fake product. These are products that are similar in shape, size and colour to the prominent brands. Manufacturers of such spurious brands mostly ride piggyback on the advertising campaign of larger players and establish their own brand in the region. The look-alikes sport colour schemes that resemble that of popular brands, but the brand name is totally different. The spell-alikes are more dubious than the look-alikes. The packaging is similar to that of established brands, and you may have a ‘Viggo’ instead of a ‘Vicco’ or a ‘Pomes’ instead of a ‘Ponds’. The third variety is the exact duplicate. These carry the name and address of the genuine company, but the product inside is spurious.

Counterfeit and Pass off Products

Counterfeiting is a kind of duplication where even the original manufacturer would not be able to distinguish between a genuine and a fake product. These fake products bear the identical name of the original product, its packaging, graphics, color pattern, design and even same name and address as the genuine manufacturer. A pass-off product, on the other hand, is one that comes with a few minor changes from the original product. The slight changes are made to avoid being categorized legally as counterfeits.

"The Economist" defines counterfeit as, "something that is forged, copied or imitated without the perpetrator having the right to do it, and with the purpose of deceiving or defrauding." Such rights are legally enshrined in patents (linked with inventions), copyright (which covers literary, musical and artistic works and software), trademarks (which include words, pictures and symbols), industrial designs and other forms of intellectual-property protection.

Counterfeiting deceives the consumer. It thus tarnishes the image of a genuine manufacturer, as its brand is a promise of quality and value. The Brand - a company's most valuable asset can be destroyed when a trademark is imposed on counterfeit products of inferior quality. When a brand loses value, legitimate business loses sales and this can pose a long-term threat to profitability.

Counterfeit products include any product bearing an unauthorized representation of a manufacturer's trademark or trade name. Examples of products which have been counterfeited include prescription and over-the-counter drugs, clothing, credit cards, watches, pacemakers, and machine and automobile replacement parts. Because counterfeit products are often of sub-standard quality, there are potential safety risks which may cause personal injury as well as economic loss.

Counterfeiting deceives the consumer. It thus tarnishes the image of a genuine manufacturer, as its brand is a promise of quality and value. The Brand - a company's most valuable asset can be destroyed when a trademark is imposed on counterfeit products of inferior quality. When a brand loses value, legitimate business loses sales and this can pose a long-term threat to profitability.

Only in India, the "fake" market is estimated to be worth more than $2 billion and it's growing by nearly 20% every year. The cost to the top companies in India is a whopping Rs 4,000 crore per annum due to

competition from counterfeit products or look-alikes, excluding the crores of rupees spent to protect top-selling brands from this threat.

The practice of counterfeiting is illegal. India does have laws protecting Intellectual Property. However, in practice, protection is weak. Fighting counterfeiting requires clear rules on enforcement and trained police, judges and customs officials. It also requires the inclination and the authority to check and seize suspected counterfeits.

Counterfeiting as a menace is a global phenomenon. Companies will never win the war against counterfeiting on their own. At best they will keep counterfeiters on the run. In order to ebb the rising tide of counterfeit, industry needs to work in tandem with the government and create consumer awareness.

Pass offs are those products whose brand names are played around with, to sound and resemble the original products. This however is only are face of the massive illegal trade in the sale of fake products in the rural market.

TYPES OF SPURIOUS PRODUCTS

Spurious brands are passed off in three forms:

1. Look-alikes: These are products that are similar in shape, size and colour to the prominent brands. Manufacturers of such spurious brands mostly ride piggyback on the advertising campaign of larger players and establish their own brand in the region. The look-alikes sport colour schemes that resemble that of popular brands, but the brand name is totally different. The look-alike business is done openly. The manufacturers do promotional campaigns and even go to the extent of displaying their manufacturing units’ names and addresses on product wrappers. The product too may be of acceptable quality and is priced 10-15 percent lower than that of the established brands. The margins offered to wholesalers and retailers are also higher than what established companies offer.

2. Spell-alikes: The spell-alikes are more dubious than the look-alikes. The packaging is similar to that of established brands, and you may have a ‘Viggo’ instead of a ‘Vicco’ or a ‘Pomes’ instead of a ‘Ponds’. These are obviously intended to cheat. Such spell-alikes generally have the genuine product’s MRP printed on them, but the retailer willingly lowers the price after a bit of bargaining. Most spell-alikes have an extremely vague manufacturers’ address on the packaging that is impossible to trace.

3. Duplicates: The third variety is the exact duplicate. These carry the name and address of the genuine company, but the product inside is spurious. Duplicates have the established manufacturer’s address, as the packaging is usually bought from junk shops. Used packets are refilled with spurious products and passed off as the real thing. They are the most dubious of the lot because they can rarely be identified. Duplicates hit cold beverages hardest because the bottles are easily available and can be refilled with some colourful ‘soda water’.

Eliminating spurious brands is not an overnight affair, but their campaign to do so may get them negative publicity as well; consumers may avoid the product altogether, fearing that they may be buying duplicates. And finding the counterfeiters is very difficult as these fly-by-night operators can easily change the locations they operate from. Besides, even if a manufacturer is nabbed, getting bail is not difficult as the offence is non-cognizable. It merely halts the illegal activity for a temporary period. It’s soon back to business at a different address, in a different grab.

TABLE

India is the world's `leading producer' of counterfeit drugs and the FMCG industry in India loses Rs 2,600 crore per year to fake goods manufacturers. "Name the product and you will find between two and 200 copies of it that compete for customer attention. At times it also happens that in the usual packet of 10 tablets taken over the counter by customers, a couple of it maybe fake, which had been removed at some point of time in the chain.'' Scary.

List of Fake brands available in rural areas

Original Product Fake Product

Dairy Milk Daily Milk

Kit Kat Kir Kat

Coffee Bite Coffee Toffee

Mango Bite Mango ripe & Mango Bits

Polo Rolo

Vicks Vibex, Vikas

Head and Shoulders Head and Showers

Sunsilk Sunmilk

Thums Up Toss Up

Lehar Lahar

Lifebuoy Loveboy

Tata Teta

Ponds Pomes

Fair & Lovely Pure & Lovely

Parachute Parashudh

Clinic Plus Cosmic Plus

Parle – G Parla – G

Colgate Toothpaste Collegiate Toothpaste

Vicco Viggo

Lux Luk

Pepsi Tipsy, Sipsy, Dipsy

7UP 1UP

Where spurious brands exists

BRANDSNo. of look alike Brands

Major States

Dabur Vatika 2 Pun/Har, Assam

Clinic All Clear 38Del, Assam, Bihar, M.P.

Surf New Excel Act Oxygen

5Bihar, W.B., Guj, M.P., Maha

Horlicks 2 Assam, Karnataka

Colgate Dental Cream

9 W.B., Bihar, M.P.

Colgate Tooth Powder

6 Assam, Bihar, Maha

Dabur Amla 34 Raj, U.P. Pun / Har

Panteen Pro-V New

7 U.P., Bihar, Guj, M.P.

Ariel Power Compact

4 Assam

Iodex 26 U.P., Guj, M.P.

These look-alike or imitation products effectively compete against the originals in the market place thereby costing the legitimate industry crores in revenue. As per the latest media reports there are around 128 versions of Parachute Hair Oil and 44 types of Vicks VapoRub. According to a report from the Hindu newspaper, it was revealed that for every 100 genuine strips of Vicks Action 500 there were 54 look-alike strips in market. Similarly there were around seven look-alikes for every 100 genuine Vicks Cough Drops; five look-alikes for every 100 genuine Vicks VapoRub; in total, there are 106 `infringers' on the Vicks franchise.

It is easy to launch spurious products

Product counterfeiting is big business. It is profitable as well. The counterfeiter makes money by deception… deliberately assuming the identity of an established, reputable manufacturer. The counterfeiter does not need to invest in expensive quality material or quality control since the product he is producing is inferior. He does not need to incur expenditure on R&D, advertising campaigns or marketing as he is riding piggyback on a manufacturer who has invested enormously in developing or promoting a brand. All he needs to do is thus copy a popular product, sell it at a discount and rake in the profits as his overall costs are low in comparison to those of a genuine manufacturer.

Why spurious products exists more in rural areas

The reason for the spread of Spurious, Counterfeit and adulterated products all across the country is that illegal manufacturers make a tremendous profit from the production and distribution of these goods. The reason for such profitability is that many of these individuals carry on fly by night operations in small labs or in old factories and garages. They, unlike legitimate manufacturers do not spend any money or resources in establishing world-class labs with international safety and hygiene standards. They spend no time or funds conducting clinical tests or research & development (R&D) for the products they produce. As they do not have any substantial overheads, all the money derived from the sale of such products goes directly into their pockets.  All these manufacturers have to do is to simply copy the formula, composition,

texture etc of the original product, reproduce it’s packaging and then sell it in the market. 

The fake or imitated products cash in on the success of the original product. The cost of advertising, research, development, trials, overheads, etc is all borne by the original company or product manufacturer. Advertising campaigns cost large FMCG companies crores of rupees. All the spurious manufacturer has to do is copy the entire product at the cost of a few thousand rupees and sell it in the market place. Even the ingredients are bad imitations of the original and most consumers are not able to make out the difference or find out only after purchasing the product. Meanwhile the spurious manufacturer makes a killing in the bargain. Due to the advances in technology any measures adopted by the original product manufacturer to counter and prevent any imitation would almost be of no use as the spurious manufacturers would quickly adapt and reproduce the same product within a few months. A lack of enforcement of existing laws by the concerned authorities has contributed to the widespread imitation of these kinds of products. The manufacturers of such drugs and medicines are quite confident that since the offence is difficult to prove they would not face any serious charges .So far the offence being a bailable one, illegal drug makers could only be booked for minor charges. The rate of conviction for such offences was extremely low. Despite crores of rupees worth of drugs being seized by law enforcement authorities from time to time it seems to have had no real effect on the manufacture and trade in fake and counterfeit products.

Raids conducted by the relevant authorities had real no effect and as soon as the raids were over the spurious manufactures would shift their operations to another locality. There would be almost no follow up action by the authorities. Most importantly since there is almost no consumer awareness about Counterfeit, Spurious and Adulterated products the counterfeiters are able to continue selling their dangerous products.

The problem of fakes is more rampant in rural areas due to low literacy levels and consumers reliance on product identification through

pneumonic.

In rural India, where the incidence of piracy is four times that of urban India, the impact of counterfeits is even more pronounced. However, the consumer is either unaware or apathetic to the menace. "Since spurious goods sold under fake brands physically impact the consumer, a consumer push is needed to act as a necessary catalyst to address the problem,'' he says. Since the rural consumer is illiterate and exposed to various brands only through the media, the chances of him going to the market with a flawed brand recall and being duped are high. This eventually affects his post-purchase decisions and can harm the image of the company.

The fake or imitated products cash in on the success of the original product. The cost of advertising, research, development, trials, overheads, etc is all borne by the original company or product manufacturer. Advertising campaigns cost large FMCG companies crores of rupees. All the spurious manufacturer has to do is copy the entire product at the cost of a few thousand rupees and sell it in the market place. Even the ingredients are bad imitations of the original and most consumers are not able to make out the difference or find out only after purchasing the product. Meanwhile the spurious manufacturer makes a killing in the bargain. Due to the advances in technology any measures adopted by the original product manufacturer to counter and prevent any imitation would almost be of no use as the spurious manufacturers would quickly adapt and reproduce the same product within a few months. A lack of enforcement of existing laws by the concerned authorities has contributed to the widespread imitation of these kinds of products. The manufacturers of such drugs and medicines are quite confident that since the offence is difficult to prove they would not face any serious charges .So far the offence being a bail able one, illegal drug makers could only be booked for minor charges. The rate of conviction for such offences was extremely low. Despite crores of rupees worth of drugs being seized by law enforcement authorities from time to time it seems to have had no real effect on the manufacture and trade in fake and counterfeit products.

Leave alone the vast uneducated masses that live in this country, hardly any of the educated informed consumer would also be in a habit of verifying the accuracy of the product name or manufacturer before buying goods at the local kirana shop. A recent study conducted by AC Neilson reveals that 80% of consumers realize they have brought a counterfeit or fake product only after they have consumed it. And there may be a large number of those who never realize the same even after

consumption!

Rural consumers also find unique uses for products. A washing machine being used to churn lassi in Punjab is now part of folklore, but here are more anecdotes, Horlicks is used as health beverage for cattle in Bihar, in Haryana, Godrej Hair Dye is used to make a pitch black beauty out of a buffalo and North Indian weavers are using condoms. For what? Well, to protect their fingers!

Villagers react differently to different products, colours, sizes, etc. in different parts of India. Thus utmost care in terms of understanding consumer psyche needs to be taken while marketing products to rural India.

Thus, it is important to study the thought process that goes into making a purchase decision, so that marketers can reach this huge untapped

Due to a lack of consumer awareness, weak enforcement of existing laws and rapid innovations in technology, the production and distribution of fake and counterfeit products has become so widespread that, today no consumer can be sure of the authenticity of the product he or she he has purchased. Today many consumers are duped into believing that the products they are buying are genuine when in reality they are actually fake. Such spurious products have greatly hampered the growth of consumer goods industry and negatively impacted consumer goodwill.

The look-alike manufacturers' strategy is to piggy back on the advertising campaign of the larger player and establish their own brand in the region. The researchers found that the look-alikes business is not a clandestine operation. Promotional campaigns such as wall paintings and display stalls are used and the manufacturers have no qualms about displaying their manufacturing units' name and address on the product wrapper. The product too is always of acceptable quality. However, the look-alike product is priced 10-15 per cent lower than the established brand, with margins offered to wholesalers and retailers higher than what established companies offer.

However, it's not the same case with spell-alikes and duplicates. The manufacturers involved in both these obviously intend to cheat. Such spell-alikes generally have the genuine product's MRP rate printed on them, but the retailer willingly brings down the price after a bit of bargaining. Most spell-alikes have an extremely vague manufacturers'

address on the packaging that is impossible to trace. But duplicates have the established manufacturer's address, as the packaging is usually bought from the raddiwalla route and filled with a spurious product.

In terms of quality, MART found that spell-alikes and duplicates have very poor quality and the consumer realises that he or she is duped after using the product. In fact, the Nielsen report revealed that eight out of 10 customers who purchased such products were cheated unwittingly. What makes things worse is the marginal penetration of the genuine product into these areas.

Another interesting observation is that FMCG counterfeit products only come in the smallest size of packaging. In the rural segment and slums where fake products thrive, the consumers low purchasing power makes sachets and 25g and 30g packs popular. And it is in the case of these small packs that consumers are duped more easily as the quantity is not large enough for the buyer to discern its quality. This is specially so in sachets of shampoo, hair oils, detergents and so on.

But if small is spurious in the FMCG sector, it is not so in the other segments where counterfeit is rampant. Crying for similar attention is the branded garment industry, book publishing, music industry, movies and information technology. And many more challenges.

Adulterated Products - A Dangerous Mix

Introduction -

The nature, type, quality & quantity of food play an important role in the maintenance of health and well being of all individuals. Food safety is an essential public health issue for all consumers. However many consumers in India & other developing countries, are often exposed to willful adulteration of their food stock and supply. Adulteration of milk and milk products, spices, edible oils, and even alcohol & beverages and the use of colours to mask product quality to cheat the consumer are quite common. This can lead to health hazards and to financial losses for consumers, families, communities, and countries. Apart form this, such episodes invoke public outrage and anger as it violates public trust in the integrity and safety of the food supply.

What Is Adulterated Food?

According to the Prevention of Food Adulteration Act, 1954 an article of food shall be regarded as adulterated -

If the article sold by a vendor is not of the nature, substance or quality demanded by the purchaser or which it purports to be;

If the article contains any substance affecting its quality or of it is so processed as to injuriously affect its nature, substance or quality;

If any inferior or cheaper substance has been substituted wholly or partly for the article, or any constituent of the article has been wholly or partly abstracted from it, so as to affecting its quality or of it is so processed as to injuriously affect its nature, substance or quality;

If the article had been prepared, packed or kept under unsanitary conditions whereby it has become contaminated or injurious to health;

If the article consists wholly or in part of any filthy, putrid,

disgusting, rotten, decomposed or diseased animal or vegetable substance or being insect-infested, or is otherwise unfit for human consumption;

If the article is obtained from a diseased animal;

If the article contains any poisonous or other ingredient which is injurious to health;

If the container of the article is composed of any poisonous or deleterious substance which renders its contents injurious to health;

If the article contains any prohibited colouring matter or preservative, or any permitted colouring matter or preservative in excess of the prescribed limits;

If the quality or purity of the article falls below the prescribed standard, or its constituents are present in proportions other standard, or its constituents are present in proportions other than those prescribed, whether or not rendering it injurious to health.

Simply put, any substance that degrades or lowers the quality of food is an adulterant.

When you see different types of sweets and edible products with bright coloring, which are meant to make the food item appear more appetizing, it could contain dangerous and toxic dyes. Many of these dyes & colorings are banned as they cause serious health hazards and may also contain carcinogens which may cause cancer in the long run.

It now common for Milk vendors in many parts of the country to add water in their milk. Most stomach disorder cases among children are due to adulterated & contaminated milk. According to a recent news report, caustic soda and chemicals, such as hydrogen peroxide were being used to increase the shelf-life of milk. Dairy owners also use harmful chemicals such as zentamycin in the milk.

Soft drinks have also become a major target for adulterators across many parts of the country. They prepare their own cocktail and simply pour it into an old bottle and sell it. Most consumers are not able to tell the difference and they purchase the product. This is especially rampant in the rural parts of the country where consumers are only semi-

literate at most and often fall victim to the adulterators. Colas, Biscuits, Chips, Snacks etc are all being affected by this menace. Most branded products in India have become a victim of this dangerous menace. A recent study estimates that nearly 10 % of all soft drinks are spurious. According to a study by two NGO’s the adulteration levels in India are at around 10 percent.

In developing countries like India where a large number of people eat and consume meals cooked by street vendors one can never be sure of the quality of ingredients used in the preparations. As a result many are made using dangerous and cheap ingredients that result in a number of individuals falling ill and being taken to hospital.

Precautions

In order to win the crusade against such adulterated foods and beverages the existing laws and standards need to be vigorously enforced by the relevant authorities and harsher penalties need to be introduced in order to deter such individuals in the future. Food standards for commodities like cereals, milk products edible oils, fruits and vegetables need to strictly prioritized. The country needs to follow international food standard such as the Codex standards that aim to ensure strict standards for food safety.. Also the FDA’s & Food testing laboratories all across the country need to be given more funds to carry out and perform their functions.

Health hazards due to spurious products and adulterated goods

Most of the products copied are top-selling brands and consumers could be seriously affected while consuming low quality adulterated products, particularly in the food and drug categories. These are usually manufactured under unhygienic conditions and without proper technical supervision.

The dangers of counterfeiting are widespread. Counterfeit products are potentially hazardous. Acts of counterfeiting can and do create severe public health risks and safety hazards, besides economic harm.

1. There is ample evidence of people being injured or made seriously ill - and in some cases dying - after consuming or using a fake product.

2. Illegal manufacturers copy the product from start to finish and sell it as the original. Many of these do not contain the required ingredients and such cosmetics and skin care products may contain harmful and toxic chemicals which can cause serious skin and body aliments that can lead to infection, rashes and allergies.

3. Spurious shampoos have even been know to cause hair loss and balding.

4. Counterfeit products, medicines, cosmetics, adulterated foods and beverages can be dangerous and lethal to unsuspecting consumers.

5. A closer inspection at some of the counterfeit medicines available in the market would reveal that ingredients like sugar, chalk powder, wheat flour, paste, fine sand, limestone powder etc are used to make the spurious drugs. Many of these kinds of medicines may be relatively harmless (although there can be some serious side effects) and have no medicinal or curative value as these ingredients are carefully chosen by the illegal manufacturers so that they do not have any serious negative effects and do not show up prominently during clinical tests.

6. However all fake drugs are not made this way. Many are produced using some of the same chemicals that are used in the original product.

7. However the dosage, quality and quantity of the ingredient or chemicals are not checked and upon consuming the medicine a person may suffer anything from a high fever, nausea and sickness to death.

8. Another reason to be extremely cautious is that it is not only ordinary medicines but life saving drugs (anti-cancer,TB, Aids etc) as well that are being produced this way. The main difference here is that due to the complex nature of the drug and the variety of ingredients used, spurious drug manufactures have been know to use the wrong chemicals to produce their drugs which has resulted in several deaths all across the country. These types of medicines would create more problems for the consumer rather than cure the pre-existing aliment.

How to identify spurious products

The menace of these look-alike and pass-off products is not easy to detect since they carry the similar brand name, graphics, packaging colors and get-up with minor alterations. This can confuse buyers, and they often don’t even know that they are buying a fake product. These spurious products replicating well-known brands are of lower quality and efficacy, with adverse side effects and safety hazards to consumers. For example, a low-quality beauty product can cause skin rashes and other health problems.

MART's study has thrown up some interesting facts that could help in understanding the operations undertaken by illegal manufacturers. Researchers Anirban Ghosh and Vikram Bhalla of the Management Development Institute (MDI), Gurgaon under the guidance of MART President, Pradeep Kashyap, found that there are three kinds of fakes in the rural market. The look-alikes sport a colour scheme that resembles a popular brand, but the brand name is totally different, for example, Shagun for Lifebuoy and Lalita Amla for Dabur Amla. The second category are the spell-alikes where you will have a `Viggo' for a `Vicco' or a `Pomes' for a `Ponds' and the packaging looks similar. The third variety are the exact duplicates which carry the name and address of the genuine company, but the product inside is spurious.

The colour of the fake 'whisky' liquid is slightly paler than the genuine whisky. The labels on the bottles, although virtually identical are slightly lighter in print quality on the fake item. The bottle shapes and caps are virtually identical but the levels to which the bottles are filled is different in the fake item to that of the genuine item.

Strategies to Counter Spurious Brands

1. Setting up a special task force: Company can set up an alert task to curb the menace of duplicate manufacturers, offering incentives to informers. For example, Coke has been conducting raids against such manufacturers. To counter the problem, it has put into place an elaborate system. It has 48 consumer response coordinators across the country who work with their teams and redress consumer complaints directly, including overcharging and spurious bottling. Besides, it has a large network of route salesman who have a one-to-one relationship with the retailers on their beat and keep their ears to the ground. When they spot suspicious activity, they inform company officials. So though it is impossible to stop counterfeiters totally, it is possible to minimize the damage they cause.

2.Upgrading packaging: Constant upgrading of packaging makes it difficult for manufacturers of counterfeits to replicate products. Dabur is making its packaging more sophisticated and capital-intensive to foil counterfeits. In 1999, 67 percent of the sales of its Lal Dant Manjan were eaten into because its plastic blow-moulded container was easy to duplicate. Now it has come up with premium four-colour shrink sleeve packaging, which has a grainy texture and water bubbles, making it difficult to replicate. This resulted in sales growth of 12 percent for the company. Dabur’s popular Amla Hair Oil too has been facing an increase in counterfeits during the past year-and-a-half, and the company is trying to find a solution to the problem.

3. Better rural distribution network: In order to tackle spurious brands, increasing their presence in rural markets is more important for marketers than legal action. A better rural distribution network will force manufacturers of fake products to flee the scene. Colgate, for instance, has such high rural penetration that fakes are hardly to be found. In fact, the MART study suggests that it is the demand-supply gap that fuels the problem in this sector. Distributors appointed by companies stick to the villages closest to their town, while counterfeit products are serviced by mobile distributors who service tiny shops and paanwallas, on cycles.

Besides, in some seasons fake products reach retailers well before the genuine brand can. For instance, during summer, fakes abound in cold drinks and talcum powder, while in winter it’s cold cream and petroleum jelly (Vaseline).

4. The perils of going small: Another interesting observation is FMCG counterfeits only occur in the smallest size of packaging. In the rural segment and slums, the consumer’s low purchasing power makes sachets of 25 g and 30 g packs popular. And these consumers are duped easily as the quantity is not large enough for them to pay attention to its quality. This is especially so in sachets of shampoos, hair oils, detergents and so on. Around 50 manufacturers, legal experts and the research company AC Nielsen have come together to form a Brand Protection Committee under the aegis of the Federation of Indian Chambers of Commerce and Industry (FICCI). The Brand Protection Committee has put in place a four-fold strategy, including focusing on the enforcement of laws, publishing the negative economic impact of fake products, taking direct action against illegal manufacturers, traders, wholesalers and retailers, and enhancing communication among the stakeholders.

Loss suffered by the industries

The FMCG industry in India loses Rs.8000 Crore, which is about 15% of total market size, per year to fake goods manufacturers. Parma Industry in India loses around Rs.4000 Crore i.e. 40% to counterfeiters. Name a product and you will find between 2 and 200 copies of it that compete for customer attention. The government loses Rs.15000 crore and the industry all in all loses Rs.30,000 crore to the counterfeits.

However, the main hidden cost to society comes in the form of the damage to local and particularly national economies caused by trade in counterfeits. Local economies are damaged by the loss of sales of genuine products that could be made by legal traders and national economies lose millions of dollars in unpaid taxes and excise revenue. The AC Nielsen study estimates the Indian government loss on account of tax evasions by unauthorized manufacturers to be around Rs 600 crores.

So, the sale of counterfeit products has far reaching effects. It is no longer a victimless crime that only affects large corporations. Unwary consumers have suffered, a few have died and in many cases the profits from counterfeiting support anti-social activities like trafficking and terrorism. Counterfeiting of goods is plain bad business.

The practice of counterfeiting is illegal. India does have laws protecting Intellectual Property. However, in practice, protection is weak. Fighting counterfeiting requires clear rules on enforcement and trained police, judges and customs officials. It also requires the inclination and the authority to check and seize suspected counterfeits. It thus requires the willingness to put counterfeiters in the dock and out of business as the penalties for counterfeiting is light compared with, for instance dealing in illicit drugs. The need of the hour is an imposition of stiff penalties, even criminal, if required.

1. It is estimated that the annual loss suffered by the industry is more than Rs.2500 crore whereas the Maharashtra government loses revenue of Rs. 225 crore every year. According to a study conducted by AC Nielsen last year, the government loses on an average 10 per cent on the sales tax, 15 per cent on excise duty and 2 per cent on octroi.

2. It is not just the consumer’s health and safety that get affected by the use of counterfeit products, spurious drugs, cosmetics and adulterated foods & beverages. The impact of this dangerous and illegal industry has also had an adverse impact on the consumer’s pocket as well as that of the economy.

3. Apart from these counterfeit and pass-off products are harming India’s reputation among foreign investors as a good & profitable place to carry on business, it may result in having an adverse impact on foreign investment in India, and hence the Indian economy.

4. Each time one of the original manufacturers discovers that there are cheap copies or imitations of his product available in the market he would attempt to stop the counterfeiters by changing the product, using new and improved tamper-proof packaging, new labels, logos, adopting and using holograms etc.

5. All this translates into more money being spent on the product by the manufacturer and this cost is eventually passed on to the consumer through higher prices.

6. In fact many jobs are lost in India and through out the world as industries cannot compete with the menace of spurious products.

7. Workers are laid off; units are closed down and due to the poor quality of the imitations and look alike brands consumers begin to loose faith in the original brand itself which in turn has a negative affect on the nation’s economy.

8. As stated before the Indian government has lost around Rs 900 crores on account of tax evasions by such unauthorized manufacturers.

9. According to a survey done by FICCI, the music industry lost around $80 million. The same study shows the FMCG sector which is the 3rd largest industry in India loosing $600-$1,800 million in the Indian market.

10. According to recent media reports the products that were fair and lovely creams and clinic plus shampoos. There are 113 fair& lovely creams and 38 kinds of clinic plus shampoos. 10% of all cosmetics and toiletries worldwide are counterfeit.

Company initiatives

Almost everyone in the value chain is affected when a brand is attacked.

Consumer - Gets life value, feels cheated and could even risk

his life by consuming spurious goods.

Brand owner - loses profits, brand value and customers.

Government - loses tax revenue and incurs additional

expenditure on enforcements due to the

Pressure.

to raid counterfeits.

Society - The resultant deterioration of culture, breeds

Dishonest behavior.

In rural India, where the incidence of piracy is four times that of urban India, the impact of counterfeits is even more pronounced. However, the consumer is either unaware of or apathetic to the menace. Since spurious goods sold under fake brands physically impact the consumer, a consumer push is needed to act as a necessary catalyst to address the problem

1. Hindustan Lever has initiated special tamper-proof packs for its deodorant spray 'AXE', whose nozzle can't be detached from the body while Procter and Gamble uses special labels for its Vicks VapoRub which do not peel off even if soaked overnight in water. This makes it difficult for spurious goods makers to imitate.

2. Wockhardt has introduced holographic packaging on the blister pack of its pain management brand, Spasmo Proxyvon, to fight the problem of counterfeiting.

3. When P&G realised that its product Vicks VapoRub was under attack by look alike goods, it made label tamper-proof.

4. Gillette India Limited today along with the crime branch of the Mumbai police, conducted raids on the dealers and retailers of Gillette branded counterfeit and infringing products. The Gillette personal care range — shave foam, shave gels, aftershave gels, aftershave splash and deodorant spray — come with a special label, price sticker and a company hologram strip, that helps consumers in distinguishing genuine products from fakes.

5. In addition, Sonata has also launched a national consumer awareness campaign driven through a poster campaign that informs consumers about the guidelines to be followed while purchasing a genuine brand watch.

6. For instance, Hindustan Lever and Procter & Gamble are working with FICCI's Mumbai-based Brand Protection Committee (BPC). The BPC tracks down manufacturers and sellers of spurious goods and tries to eliminate these channels by interacting with the Government agencies and judiciary.

7. Most of the spurious products are finding their way in the market due to strong brand pull and lack of reach of genuine Tata Agrico products. Therefore, the first and foremost step we are taking is to extend the reach of our distribution network to make the products available to the consumers. We also propose to undertake communication campaigns through this comprehensive distribution network to educate the consumer about the features of genuine Tata Agrico products.Parallely, the brand protection cell also takes action from time to time to deter the supplier of spurious products.

8. Consider P&G's experience. According to official sources, the company's troubles began in September 1998, when major changes took place in the Vicks franchise. The company moved from the old Vicks packaging to the Global `Blue' mega branding packaging, the price of Vicks products increased and the company was simultaneously working on a new distribution system. In December 1998, the first of the look-alike brands started appearing in the market. Reports from P&G's field force picked up six pass-off brands - Endo Action, Jet Action, Anadol Action, API Action, Vicas and Vikas cough drops. In January 1999, P&G moved the courts and the infringing products of all six pass-off brands were seized.P&G went in for a store audit research with ORG-MARG to define the exact impact of look-alikes and pass-offs on the Vicks business. It revealed that for every 100 genuine strips of Vicks Action 500 there were 54 look-alike strips in market. Similarly there are seven

look-alikes for every 100 genuine Vicks Cough Drops; five look-alikes for every 100 genuine Vicks VapoRub; in total, there are 106 `infringers' on the Vicks franchise. Ariel, Whisper and Shampoos are also affected, but to a smaller extent.

9. Pepsi's experience has been similar. It has had to deal with copycat drinks called Dipsy, Tipsy, Sipsi, Toss Up, Dream Cola, 1UP, Lahar, and so on. The problem peaks in summer, when the consumption of colas and juices zooms. It is easy for manufacturers to set up shop with a bucket, plenty of sugar, artificial flavours, dangerous colours and soda. And of course, these fakes piggyback on the success of the original.Though Pepsi and Coke have dropped prices substantially to make their products the flavour of the masses, spurious products still score because of poor consumer awareness. And fake product manufacturers reap windfalls because there are barely any input costs, no safety standards involved, excise or taxes paid.

10. According to Ashok Gupta, General Manager (Legal), HLL, technology had become so sophisticated now that reproducing logos and packaging with multi-colour scanning machines was easy. He said HLL regularly makes discreet enquiries, and maintains a system of checks and balances. He added that in the event HLL found a supplier pilfering or selling a pass-off or bogus product, HLL would terminate its contract with the supplier and make it pay for losses incurred. Those HLL products that appealed most to counterfeiters were Fair and Lovely, in the skin care segment, and Clinic Plus Shampoo.Gupta said that the speed in tackling counterfeits and proving the guilt of the offending party was of paramount importance. Some of HLL's products also warn potential counterfeiters of prosecution, ensuring that counterfeiters are actually warned at the start of their dubious activities.

11. Companies are also trying to tackle the problem another way. They are going in for upgraded packaging so that manufacturers of counterfeits find it difficult to replicate their products. Dabur is one of them that is making its packaging more sophisticated and capital-intensive. Its Lal Dant Manjan, at the peak of the problem in 1999, had about six-seven per cent of its sales eaten into. When Dabur replaced its Lal Dant Manjan plastic blow moulded container with a premium four-colour shrink sleeve packaging which had a grainy texture and water bubbles, the packaging was difficult to replicate. This resulted in a sales growth of 12 per cent in the original product.Dabur's popular Amla Hair Oil has been facing an increase in counterfeits for the past year-and-a-half and the company is trying to work a way out of it. Though four raids have been conducted in

the past six months and the company has replaced its glass bottle with a pet bottle, illegal manufacturing continues. Dabur finds that a subtle difference in packaging such as a gold foil stamping on the label or introducing holograms is not enough for home product consumers, specially the less educated who find it difficult to make out the difference between a genuine and a fake.

12. Coca Cola too is in the process of exploring changes in its packaging. They are trying to create technology to incorporate cert

Kavach launched to check fake products

PRS Permacel Pvt Ltd has come out with a fully integrated solution to counter brand attack and duplication, rampant in the Indian consumer market.

The solution, christened 'Kavach', could fight a wide range of counterfeiting problems experienced by manufacturers mainly in the automotive, FMGC and agro chemicals sectors.

Kavach offers a combination of both overt and covert solutions that effectively checks counterfeiting problems, adding that the losses to due to duplication of products in India.

In the FMCG industry alone, losses due to influx of fake goods are huge. In south India, over 35 per cent of the automobile spare parts are duplicates.

Kavach uses a combination of the latest visual/optical technologies such as holograms, cutting edge printing techniques and specialised inks to create customised solutions for each brand.

More about Kavach - Industries

The counterfeiting and diversion of products poses a risk to corporate profits and reputations. As a company's first line of defence, the packaging of products that must be convincing and verifiable.

Kavach solutions are being implemented today in a variety of industries from pharmaceuticals to consumer products. A combination of sophisticated technologies implemented in Kavach-integrated solutions has been a very effective tool for most industries. Above all, these technologies have given companies unparalleled power in fighting counterfeiters.

Kavach has covert and overt capabilities that can be easily verified at the point of sale or distribution without the need for special equipment. The unique characteristics of Kavach solutions prevent accurate replication or effective copying by conventional techniques. Kavach solutions can also be designed to include tamper evident features whereby any attempts of alteration or removal are exposed.

Pharmaceuticals

Professionally-produced counterfeit drugs that bear a strong resemblance to the pills they mimic are creating a major headache for pharmaceutical companies. Losses in revenues and potentially enormous liabilities loom. In addition, unauthorised diversion in the supply chain by distributors, inspired by the potential of cross-border price arbitrage, are eroding margins and creating additional legal liability.

In the pharmaceutical industry, counterfeiting poses additional risks that can threaten the health and safety of consumers. The ability of combining Kavach with current packaging formats gives pharmaceu-

tical companies a cost-effective solution for anti-counterfeiting and tamper-evident applications. For example, Kavach solutions can be used on labels, closures, blister packs, and all types of primary and secondary packaging. Kavach seals validate pharmaceutical packaging, so that pharmacists can easily verify that they are receiving authentic drugs through the correct supply chain.

Automotive and Manufacturing

The primary authentication and security issues faced by the automotive and manufacturing industry are counterfeiting and product liability. Depending on the particular situation, Kavach suggests a wealth of possible solutions.Kavach also works with individual customers to develop a custom-tailored solution that responds to the requirements of the specific application.

Consumer Goods

Within the consumer goods industry, Kavach works primarily with brand owners within the fast moving consumer goods (FMCG) industry. Kavach has a wide variety of customised solutions that address many of the challenges faced by companies within this industry on a daily basis, such as counterfeiting, product diversion, unauthorised production and liability issues.

Laws Governing

Following are the laws under which legal action can be taken against manufacturers and sellers of fake products:

1. Indian Penal Code 18602. Drugs and Cosmetics Act, 19403. Prevention of Food Adulteration Act, 19544. Consumer Protection Act, 19865. Bureau of Indian Standards Act, 1986 and6. Trademarks Act, 1999

There are a number of laws dealing with infringement such as the Indian Penal Code 1860, the Trade and Merchandise Marks Act 1958, the Copyrights Act, the Design Act, the MRTP, the Drugs and Cosmetics Act, the Common Law and the Law of Torts. However, certain loopholes exist in law which is often advantageous to and aids the counterfeiter.

Implementing agencies face enormous problems in issuing warrants, arresting the culprits, seizing the goods, storage of seized goods and presenting the evidence in court. The corporates subsequently have to present voluminous evidence in court along with data such as invoices and user data and strong evidence to outwit the extremely intelligent counterfeiter. The process takes too long and is time consuming often leading to destruction of vital evidence. Punishments are not punitive and sentences are few with most of them escaping jail sentences, which are rarely more than three years. The counterfeiters close shop and move on to another location to escape the law and thus continue counterfeiting.

At a recent national workshop on "Protecting brands — a war against counterfeiting'' held in New Delhi by the Brand Protection Committee (BPC) of FICCI, all the stakeholders — corporates, Government, judicial luminaries, lawyers and police officials along with representatives of the consumer advocacy groups gathered together to express their concerns and find solutions to combat this problem.

The Necessary Legal Battle

Worldwide, one of the most effective ways by which the battle against piracy, counterfeit and spurious products has been fought is through use of legal tools. There are certain legal provisions that would aid the consumer in his fight against this menace. Consumers would have to look at the situation and simply see which of the relevant laws would help them with respect to their problems.

The Drugs and Cosmetics Act, 1940 can be used to defend and protect consumers interests. Provisions under this act include punishments & fines for misbranding drugs, confiscating of such drugs (sec 14), prevention of the import of such drugs (sec10) etc. It prohibits the sale of such drugs under section 18. It also provides for the setting up of Central Drugs Laboratory for testing batches of drugs. It also prescribes strict standards that are to be followed by drug manufacturers and importers. It also clearly defines a misbranded drug under section 17. Section 13 clearly states that whoever contravenes any part of this act will be

punishable with imprisonment which may extend to one year, or with fine which may extend to five hundred rupees, or with both. If convicted again of the same offence then, in addition he shall be punishable with imprisonment, which may extend to two years, or with fine which may extend to one thousand rupees, or with both.

Prevention of Food Adulteration Act, 1954 prohibits the manufacture, sale, etc. of certain food articles. Among others, it states that no person shall manufacture, store, sell or distribute any misbranded food, adulterated food. It states that an article of food shall be deemed to be misbranded if it is an imitation of, or is a substitute for, or resembles in a manner likely to deceive, another article of food, and is not conspicuously labeled so as to indicate its true character, if it is falsely stated to be the product of any place or country, if it is sold by a name which belongs to another article of food, if it is so colored, flavored, coated, powdered or polished as to conceal any damage to the article or to appear of greater value than it really is, if false claims are made for it upon the label or otherwise. It also provides for food inspectors to take samples of any kind of food product and examine it. Penalties can be imposed under section 16 for impose a sentence of imprisonment for a term which shall not be less than three months but which may extend to two years, and with fine which shall not be less than five hundred rupees.

The Trade Marks Act, 1999This Act provides for registration of trade-marks, prevention of the use of fraudulent marks and Protection of registered trade-marks among others. The trade mark Act also allows registration to be secured for distinct names, devices, labels, words, colours, shapes, sounds that define and distinguish one manufacturer’s goods or services from another’s in the market. This helps in preventing anyone else from copying or imitating their products. It provides for punishments under section 103 for Applying False Trade Marks, Trade Descriptions, etc punishable with imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees. Under section 104 of the act there is a penalty for selling goods or providing services to which false trade mark or false trade description is applied. The punishment for this is the same as above. Such counterfeiters can also be punished by an enhanced Penalty on second or

subsequent conviction under sec 105 of the act.

Indian Copyright Act, 1957In cases of piracy, illegal duplication & counterfeiting of works such as computer programs, software, computer databases, dramatic, artistic and musical works, cinematographic films and sound recordings one can always find relief under the copyright act. The copyright act offers legal protection to the original creators of all these products or works. It prevents anyone else from reproducing the product, distributing the product or selling the product, at least not without the original creators’ prior permission. Under section 14 of this Act, it is illegal to make or distribute copies of copyrighted software without proper or specific authorization. A civil and criminal action may be instituted for injunction, actual damages (including infringer's profits) or statutory damages per infringement etc. Section 63 B, stipulates a minimum jail term of 7 days which can be extended up to 3 years. The Act further states fines ranging from Rs. 50,000 to 2, 00,000.

Consumer Protection Act, 1986Under the Consumer Protection Act, 1986 one can approach the consumer courts under the heading of Unfair trade Practices which  means any unfair or deceptive method/practice adopted by a seller for the purpose of promoting the sale, use or supply of any goods or for the provision of any service. Such unfair trade practice will include: Making false or misleading representations that goods/services are of a particular standard/quality/quantity/grade, Representing that goods/ services have characteristics/ uses/ accessories/ sponsorships etc. which they do not have or giving any guarantee as to performance/efficacy that is not based on an adequate or proper test, Misleading the public concerning the price at which products & services are sold; Advertising the supply of goods/services at bargain prices, when in fact they are not meant to be offered for sale at such bargain prices; Offering of gifts, prize with the intention of not providing them as offered or if the price of the gift/prize is actually included fully or partly in the item sold, non compliance of product safety standard, Hoarding or destruction of goods. If any product sold in the market contains a defect a consumer can approach the consumer court for redressal. Defect means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the

time being in force or under any contract which express or implied or as is claimed by the trader in any manner whatsoever, in relation to any goods.

The Bureau of Indian Standards notifies the quality standards for various items including consumer goods. There are also penalties for those who use the “ISI” standard mark without obtaining the requisite license.

Food Laws

The details of various food laws in operation in India is as under: -

1. Prevention of Food Adulteration Act (Ministry of Health)

The Act lays down specifications for various food products and is mandatory. The Ministry of Health in 1995 had constituted a Task Force under the chairmanship of Shri E.S. Venkataramaiah, Chief Justice of India (retired). The Task Force recommended that there should be emphasis on good manufacturing practices instead of detection of adulteration and prosecution. It also express concern about lack of laboratory equipments and quantified persons. In addition it also suggested that the name of PFA Act be changed to Food Safety Act.

2. Agriculture Produce (Grading & Marking) Act (Ministry of Rural Development)

This Act is commonly known as AGMARK and is voluntary. The Act lays down the specifications for various agricultural commodities including some processed foods.

3. Laws being operated by Bureau of Indian Standards (BIS)

BIS is the largest body for formulating standards for various food items. These standards are also voluntary.

4. Essential Commodities Act

A number of quality control orders have been issued under Essential Commodities Act such as FPO, MMPO, Meat Product Order and Vegetable Oils Control Order. These orders are mandatory and primarily meant for regulating the hygienic conditions. They need to be clubbed under one order which may called Food Products Order.

B. Harmonization of Food Laws

The review of multiple laws is necessary to have a uniform and logical approach for regulating the quality of food. The following action is being taken by various Ministries:-

1. The Ministry of Civil Supplies & Consumer Affairs has brought out a paper for consideration of Committee of Secretaries (COS). The paper recommends that BIS should formulate standards for all food items in the country. This will be a major step towards harmonization of food laws and is still under consideration of COS for finalization.

2. The Task Force constituted by the Prime Minister under the chairmanship of Shri Nulsi Wadia has submitted its report which is under the consideration of the Government. The Task Force had advocated promotion of food safety and quality. The Task Force has further made following suggestions:-

o Food Regulation Authority (FRA) be set up to formulate and update food standards for domestic and export market.

o FRA should replace the PFA to conform to international standards. The Task Force has given ten specific recommendations such as provision of storage simplicitor, simplification of sampling procedure, simplification of procedure for nominee, time limit for prosecution, standard methods of analysis to be prescribed, penalty should graded according to the gravity of offences and provision of adequate/infrastructure and laboratories.

o Harmonisation of Indian standard with quality norms of Codex and WTO.

o The Central Committee of food Standard (CCFS) should be replaced by FRA Governing Body for expeditious decisions.

Source :- Ministry of Food Processing Industries

Drugs Laws

At present the following Acts and Rules made thereunder that govern the manufacture, sale, import, export and clinical research of drugs and cosmetics in India.

The Drugs and Cosmetics Act, 1940 The object of this Act is to regulate the import, manufacture, distribution and sale of drugs.

The Pharmacy Act, 1948 The aim of this law is to regulate the profession of Pharmacy in India.

The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954 This Act is meant to control the Advertisements regarding drugs. It

prohibits the advertising of remedies alleged to possess magic qualities and to provide for matters connected therewith.

The Narcotic Drugs and Psychotropic Substances Act, 1985 This is an Act to consolidate and amend the law relating to Narcotic Drugs, to make stringent provisions for the control and regulation of operations relating to Narcotic Drugs and Psychotropic Substances and for matters connected therewith.

The Medicinal and Toilet Preparations (Excise Duties) Act, 1956 The Drugs (Prices Control) Order 1995 (under the Essential

Commodities Act)

FICCI’s initiative to fight spurious products: --

Recently the Brand Protection Committee (BPC) was instituted under the auspices of Federation of Indian Chamber of Commerce and Industry (FICCI), with the intention of facilitating trademark protection in India and protecting the interests of consumer and industry interests against the menace of pass-off and counterfeit products. Many companies have joined together to take up this battle against the counterfeiters all across the country. The fight against spurious products, counterfeit and pass-off/look-alike products in many categories of Fast Moving Consumer Goods (FMCG), Drugs, Textile, and Automobiles & Lubricants. BPC comprises of many consumer non-durable companies such as Hindustan Lever, Colgate, Proctor & Gamble, Marico, Dabur, Pepsi, Glaxo SmithKline and many others. Besides, automobile and lubricant companies such as IOCL, HPCL BPCL, Telco, Castro and Bajaj Auto are also associated with it. More raids and seizures are being carried out against countefreit manufacturers in urban as well as rural areas

BPC’s mission is to work co-operatively with the Central & State Government authorities, industry and trade associations, individual companies and other organizations including consumer protection groups to eliminate counterfeit and pass-off products.

BPC has four-fold Strategy to counter the menace of counterfeit and pass-off products:

Advocate more effective enforcement of existing Laws and Rules.

 Measure and publicize negative impact of Counterfeit.

Open communication channels between stakeholders to generate awareness and stimulate action against counterfeit/pass-off products.

Take action against infringers via Regulatory Authorities.

Recent BPC activities: --

BPC has set in motion the process of setting up special IPR Cells in the Police in the States of Maharashtra and Madhya Pradesh. It has even initiated Common Enforcement Raids and worked with enforcement authorities to raid high infringing markets in Delhi, Ahmedabad, Bangalore, Mumbai and Indore. It creates immense media and industry awareness on parallel industry of counterfeits and pass-off products. It has made several representations to the Government. Representations have also been made to the Law Ministry for changing /amending Trade Mark Laws currently not in favour of genuine Brand’s Manufacturers. Lately, it has launched a website to increase awareness of general public and other opinion leaders on the counterfeit issues.

In fact The National Association of Software and Services Companies (Nasscom) has even established a special Anti-Piracy (Hotline) - 011-301 5419at New Delhi and a toll free number - 1600 334455. The initiatives taken by Nasscom against piracy have helped in reducing software piracy in India from a high 89 percent in 1993 to 60 percent during 1999.Of course a lot more needs to be done if we are to succeed in this crusade against piracy & counterfeit products.

Summary of Report of the Brand Protection Committee / FICCI

The Brand Protection Committee (BPC) has been set up under Federation of Indian Chamber of Commerce and Industry (FICCI) to fight spurious products viz. counterfeit and pass-off or look-alike products in select categories of consumer goods, including OTC Drugs (e.g. Household Medicines)and Cosmetics. In the nearly two years since BPC has been in existence (from August 2000), it hasmade substantial progress in its primary objective of fighting spurious products.

Anti-counterfeit Measures and Results

During this period BPC has set in motion the process of setting up special IPR Cells in thePolice in two states. BPC has initiated Common Enforcement Actions (Raids etc.) seizing overRs. 15 crs. of counterfeits and pass-offs in the last year and a half. Worked with EnforcementAuthorities to raid high infringing markets in Delhi, Ahmedabad, Bangalore, Mumbai andIndore. By conducting a National workshop in February 2002, it has created immense mediaand industry awareness on parallel industry of counterfeits and pass off products. The Nationalworkshop had active participation from the consumer activists, Govt. and Police authoritiesincl. the Union Law Minister and the Judiciary. It has made sustained efforts all through out tohighlight to the Govt at both state and central level the magnitude of the problem. Repeatedstudies by ORG Marg and ACNeilsen in select categories of consumer goods have givenestimates of the extent of the problem, which has helped when making representations to theGovt. The Nielsen study indicates that turnover of Spurious products in packaged consumergoods industry is around Rs. 2600 crores with Govt. losing revenues of Rs.900 crores in exciseduty, sales tax and octroi. ORG store audit indicates for example that there are 113 look-alikesof Fair & Lovely Cream , 44 of Vicks VapoRub and 26 of lodex and the turnover of thesespurious products is between 5% to 15% of genuine brands. The study also indicated that saleof such spurious products is as much, if not more, in Chemist shops as in General or K-iranastores. The Nielsen Study also indicated that 80% of consumer who purchased a pass-off orlook-alike product felt cheated as they had wanted to purchase the genuine brand but weremisled by the similarity of pack design and brand name.

Representations to the Govt

BPC has made several representations to the Govt. A dialogue with the Revenue Secretary has beeninitiated to propose the need for suitable amendments in the central excise Act to curb the menace ofcounterfeits and pass offs. Representations have also been made to the Law Ministry forchanging/amending Trade Mark laws currently not in favor of manufacturers of genuine Brand'sowners. Setting up of special IPR Policing Cells s in the states of Maharashtra and Madhya Pradeshhas been initiated. The FDA, Excise, Sales Tax and Police are all being coordinated via the specialcell/nodal agency to take comprehensive action against the infringers. Meeting with Maharashtra PDA: Sustained efforts

from BPC for better enforcement of laws byregulatory authority ultimately succeeded in setting up a regular review mechanism. In a meeting withthe Industry in the month of June 2001, the Food and Drugs Administration in the state ofMaharashtra, agreed to set up a review mechanism whereby BPC and top FDA officials will meet onmonthly basis and exchange information on the spurious Drug and Cosmetic products in the markets.Based on the information from the Industry, FDA is initiating enforcement action. This is a verypositive development as Maharashtra FDA now recognizes that the issue on Spurious Drugs andCosmetics is rampant and needs to be resolved.

Fake-busters.com: In April 2001, BPC - , a website to increaseawareness of general public and other opinion leaders on the counterfeit issues. Fake-busters.com isan innovative tool, which brings all the stakeholders of the anti-counterfeit issues together. Siteprovides important information on anti-counterfeit campaign of the industry coalition and allows aperson to lodge a complaint on availability of counterfeit products in the market. Website alsodisplays current packaging of popular brands to help consumer know whether product purchased is apass-off product or counterfeit. .

Reward Scheme launched: A reward scheme has been launched where anyone informing BPC ofspurious goods' infringement activities resulting in a successful raid would get a reward in which theupper limit is Rs.5 lacs. Posters giving detail of this reward are being put up at strategic locationswhere infringement activities are the highest. Another email Address has been created for this purpose called

Government initiatives

The government has enacted the laws and it is up to the police and other agencies to ensure that the laws are implemented. In fact, it is not the paucity of the laws but the ineffective implementation of the laws, which causes the real problem. The war against spurious goods seems to be intensifying with the Government now mooting an independent authority to initiate action to protect consumers from the menace of counterfeit, fake, spurious and contraband products.

The setting up of an independent authority is a recommendation from the Working Group on counterfeit, fake, spurious and contraband

products set up by the Department of Consumer Affairs, which submitted its final report recently.

The Department of Consumer Affairs is already contemplating the setting up of a National Consumer Protection Authority, which would focus on critical areas affecting consumer health and provision of safe drinking water, milk, food and drugs, the report pointed out.

Anti-counterfeit drive hits Maharashtra’s countryside

1. Pamphlets, notebook covers distributed in 4,000 villages warning about hazards of fakes Soniya Tripathi

2. Pamphlets, notebook covers and notices are being distributed warning people about the prevalence of spurious products across the villages of Maharashtra, Madhya Pradesh and Gujarat. In an awareness drive, Rural Relations - a consumer relation organisation - is attempting to caution villagers regarding counterfeit products available in the market

3. More people are falling prey to counterfeit products in the rural markets every day. “These products don’t have a valid address or an ingredients’ list and are not even registered,” he says. “There are over 120 duplicate products of Parle-G biscuits, for instance. Toothpastes, tea, hair oil and face-creams have their counterfeits too.” People opt for ‘fakes’ as they come cheap. Government tries to inform people about the hazards of these products. Government want people to spend more and purchase better products. This drive is not to endorse any brand. They go around introducing themselves as ‘village developers’ and targetting segments armed with pamphlets in local languages which have logos cautioning people regarding counterfeit products. One way they have devised of getting through to the people is their children. “People listen to what children say in small villages. Government will educate secondary school students by distributing among them notebook covers with information on them. The drive was kicked off six months ago in over 400 villages across Maharashtra, Madhya Pradesh and Gujarat and plan to extend the drive in as many villages. It has chalked out 4,000 villages in Maharashtra with a population between 2,000 and 10,000 and also wanted to cover a village with around 350 families.

4. Recently the Brand Protection Committee (BPC) was instituted under the auspices of Federation of Indian Chamber of Commerce and Industry (FICCI), with the intention of facilitating trademark protection in India and protecting the interests of consumer and industry interests against the menace of pass-off and counterfeit products. Many companies have

joined together to take up this battle against the counterfeiters all across the country. The fight against spurious products, counterfeit and pass-off/look-alike products in many categories of Fast Moving Consumer Goods (FMCG), Drugs, Textile, and Automobiles & Lubricants. BPC comprises of many consumer non-durable companies such as Hindustan Lever, Colgate, Proctor & Gamble, Marico, Dabur, Pepsi, Glaxo SmithKline and many others. Besides, automobile and lubricant companies such as IOCL, HPCL BPCL, Telco, Castro and Bajaj Auto are also associated with it. More raids and seizures are being carried out against countefreit manufacturers in urban as well as rural areas

BPC’s mission is to work co-operatively with the Central & State Government authorities, industry and trade associations, individual companies and other organizations including consumer protection groups to eliminate counterfeit and pass-off products.

BPC has four-fold Strategy to counter the menace of counterfeit and pass-off products:

1. Advocate more effective enforcement of existing Laws and Rules.

2.  Measure and publicize negative impact of Counterfeit.3. Open communication channels between stakeholders to generate

awareness and stimulate action against counterfeit/pass-off products.

4. Take action against infringers via Regulatory Authorities.

Duplication is more in choclate brands

The rural consumers by looking into the ads of leading chocolate companies unknowingly purchase the fake chocolate brands because of their impulses. 

Hence, the researcher has conducted a survey in the petty shops in rural areas to find out the fake chocolates available.

It has been found out that fake chocolates and toffees are available in more number of petty shops for the leading brands.

What strategies choclate companies can adopt to kill fake brands

Product: Without compromising on quality, the leading chocolate companies can reduce their size to match the rural demand.

Pricing: As the rural consumers are bothered about economy pricing the leading chocolate companies can follow the strategy of "penetration pricing"

Promotion: The traditional method of promotions has to be changed by the MNCs and National Companies in attacking the fake products.  A portion of the ad budget can be allocated for retailers' margin. Through ad campaigns, the companies can also create awareness among consumers regarding the evils of fake products.

Physical Distribution: Sales professionals of the local region who have familiarity in the local (regional) language can be appointed to look after the sales of rural areas, so that they can easily converse with the retailers and can build goodwill.

Spurious drugs spoils india

The widespread manufacture and sale of spurious drugs in India places every member of the general public at serious risk to their life. According to several reports, out of the approximately Rs19,000 crores worth of business annually in the pharmaceutical sector in India, approximately Rs4,000 crores is on account of spurious drugs alone. Sub-strength spurious drugs such as anti-malarial drugs not only fail to cure but over time, create resistance in the malarial parasite with disastrous consequences for the patient. Sub-strength spurious drugs such as anti-malarial drugs not only fail to cure but over time, create resistance in the malarial parasite with disastrous consequences for the patient.

Even when spurious drugs do not endanger life, they can leave the patient seriously ill and those with inadequate potency do bigger harm

to the society in general. Drug resistance develops when patients consume drugs with inadequate potency forcing them to look for costlier new generation drugs. And these patients could put the entire society at risk by spreading drug resistance. Unlike other cases where the consumer knows his intent, the spurious drug industry thrives on consumers' ignorance, lack of stiff penalty for indulging in such activity and finally on lax regulatory system. Packaging is so nearly perfect that distinguishing a spurious drug from a genuine one is almost impossible as the fake makers are investing nearly 20 percent of the total investment in packaging.(a recent finding).

The consequences are not restricted to consumers or the patients alone. With a market share of nearly 20 per cent of the total drug market in India. The spurious drug industry's thirst for more is clear to see. It has already set its eye on the export market and succeeded in taking spurious drugs beyond our shores. Many are sent overseas, too especially to the states of the erstwhile Soviet Union. Several people have been arrested while trying to smuggle out spurious drugs in bulk to these countries. Africa and Latin America have taken cognizance of the increased export of spurious/sub-standard drugs from India and have started complaining about it. And worse, nearly 3-5 per cent of the drugs landing in the U.S. are spurious. The U.S. has already put India in the 301 watch list threat some months ago. If implemented it would totally ban export of drugs from India and sound the death knell for the Indian drug industry. Punjab, Haryana, Himachal Pradesh, Delhi, Uttar Pradesh, Bihar, Gujrat and to some extent Madhya Pradesh have the bulk of spurious drug manufacturing units. In UP, the major sale of spurious drugs is in Agra, Lucknow and Varanasi.The Indian pharma industry, including those manufacturing fakes and spurious drugs, is growing at the rate of about 20 per cent annually, which means that every year the chances of your buying a medicine that can do more harm than good (as some even contain toxic material) are also rising proportionately. According to an industry estimate, 15 percent of the drugs and pharmaceuticals sold in India are either spurious or substandard and the percentage is only growing with no effective check on this illegal activity.Increasing pressure of a powerful industry lobby on the government to allow certain drugs and cough preparations as OTC and the government's move to classify a set of ayurvedic preparations as food supplements may add a new dimension to the problem of spurious and substandard drugs in future. By permitting drugs for minor ailments as OTC and allowing them to be sold by stores other than medical shops, monitoring of their safety

and efficacy will be almost impossible for state drug authorities just because of the huge number of such stores in each state In India, drug pirating is made possible by the existed patents regime. These laws offered protection only for manufacturing processes and not for the products themselves. Besides, protection for process was also available for a period of seven years, unlike in the West, where patent protection is for a period of 20 years. As a result, under existing Indian patent laws, Indian drug companies were well within their rights to reverse-engineer well-known brands and sell them as their creation. Significantly, drug piracy of this kind is reduced from 2005, when India and many other developing countries extended process patents to products too under the World Trade Organization. In view of this development, some Indian drug companies are already moving away from the manufacture of generics to the development of new drugs through research and development.

“Unfortunately a very big market of spurious drugs is flourishing in our country. Guilty people who play with the lives of millions are rarely brought to books. It is unfortunate that no action is taken against them....”The penalties and provisions existing under the Drugs and Cosmetics Act, 1940 are ineffective. One of the reasons for the existing penalties not being effective is that the manufacture and sale of spurious drugs is primarily a clandestine activity, which is showing increasing involvement of organized crime in recent years. Besides, offenders are able to easily obtain bail, as the offences are non-cognizable and bailable under the existing provisions of the Act. The offenders remain on bail due to delay in disposal of cases for manufacture and sale of adulterated and spurious drugs

Basic Precautions or action to be taken by consumers

The whole exercise of protecting brands would remain futile unless the consumer is kept in mind. Corporates spend huge sums on advertising and protecting brands without a thought for consumers who by choice have brand loyalty. There is no doubt that the consumers also need to be cautious when buying products. Counterfeiting of products is rampant and companies must change their policy to include redressal mechanisms for unsuspecting consumers who have been cheated.

Consumers have to come together and realize that some prudence and caution on their part can long way in countering this

menace. Some basic and simple measures that can be adopted by consumers all across the country are -

1. Make sure you buy all your products from a reputed shop or establishment.

2. Try to stop eating foods from roadside vendors, as many of them do not follow safety and hygiene standards while preparing their food.

3. Always check the labels of all products thoroughly. You should be on the look out for badly printed labels, absence of the label itself or lack of details of the medicine, faulty sealing and differences in the colour of the packing.

4. While buying medicines you, the consumer should always look for the batch number, manufacturing date, expiry date, manufacturing license number, manufacturer's name/address etc on the pack.

5. With respect to cosmetics, skin and beauty products it is necessary look out for any extraneous matter in liquid preparations, lumps in creams or ointments and as always, check the labels and read the list of ingredients carefully.

6. Always insist on asking for a bill / receipt or cash memo for all products that you may purchase. This will be especially useful if & when you need to show proof of your purchase. 

7. You must always destroy empty packs, bottles and containers of used or leftover medicines to avoid recycling or refilling.

8. Make a complaint or report to the company if it is suspected that original product is being duplicated or imitated. It is important to try and ensure that company will lodge complaints either with the local police or the necessary authorities in the state.

9. If you are aware of any particular mark, logo or hologram the product is supposed to have, please ensure it is present before you buy the product 

10. It also important for original manufacturers to make sure that the label looks distinct and consistent so that consumers can tell the difference between a genuine and a fake one.

Main states in India which has major market for spurious products

Punjab a major market for spurious products:

After Delhi, Punjab has emerged as a major market of spurious and duplicate products in North India. The branded companies are concerned that consumption and production of various duplicate and fake products in the state. Which include FMCG products, medicines, auto-parts, computer software, pesticide and seeds, have already crossed over Rs 1000 crore annually in the state.

Precautions

The companies are now hiring the consultancy firms to track down the markets, which are producing and selling their spurious products. Amritsar, Mandi Gobindgarh and even Chandigarh are on the radar of these companies, Apart from conducting raids on retailers, the consultant firms have come with new technologies to the protect the brands besides offering consumer awareness programmes as a solution to check the menaces.

A large number of small scale units have come up in Punjab which have mastered the art of making 'almost' same products that are being manufactured by big brands in the pharma, auto parts, textile, seeds and other sectors. In fact, the companies are losing 10 to 40 per cent of their market due to the sales of spurious and duplicate products.

At the national level the companies are losing business volume +annually, which include pharmaceutical, auto-parts, software, music,agro-chemicals, liquor and soft drinks.

A team of Tisco raided the premises of a firm in Mandi Gobindgarh, which was selling steel under the name of the company after processing imported scrap from World Trade Centre. Some other companies have also hired agencies to raid the firms in Ludhiana, Amritsar and Jalandhar that were manufacturing spurious auto-parts, sports goods, software and other items.

The officials of the BIS also admitted that due to lengthy and cumbersome judicial process to punish the guilty, the MNCs and Indian Brands were finding it almost impossible to check the duplication of their products.

War on counterfeit and spurious products -The facts

The Indian economy has undergone a number changes in the last decade due to liberalisation and globalisation. Apart from the positive effects of increased goods and services available to consumers, the negative effects of counterfeiting, adulteration and manufacture of spurious goods has become an increasingly dangerous menace to consumer choice, health and the economy. Though this problem has always existed, now more than ever, counterfeit and spurious products have invaded every aspect of our lives. From products such as radios, geysers, computer softwares & phones to food items, beverages, cosmetics and medicines, all have been illegally duplicated, copied and counterfeited.

Due to a lack of consumer awareness, weak enforcement of existing laws and rapid innovations in technology, the production and distribution of fake and counterfeit products has become so widespread that, today no consumer can be sure of the authenticity of the product he or she he has purchased. Today many consumers are duped into believing that the products they are buying are genuine when in reality they are actually fake. Such spurious products have greatly hampered the growth of consumer goods industry and negatively impacted consumer goodwill.

It is clear that Counterfeit and pass off products infringe at least two of the consumer’s rights, namely: -

Right to be Informed -Means right to be informed about the quality, quantity, potency, purity, standard and price of goods so as to protect the consumer against unfair trade practices.

Right to Safety - Means right to be protected against the marketing of goods and services, which are hazardous to life and property. The purchased goods and services availed of should not only meet their immediate needs, but also fulfil long term interests.

Since the problems of brand protection are practical as well as legal, an anti-piracy strategy involves the following four prong action;

1. Labelling

Lable the products clearly, distinctively and consistently to ensure that consumers can tell the difference between a genuine and a fake, or if need be, to ensure that a court can tell the difference.

2. Identification

A range of means can be employed to monitor and track the sale of goods that infringe the brand-related rights. These include:

engaging private inquiry agents to collect evidence through surveillance and trap purchases;

monitoring high-risk outlets and promotional channels that counterfeiters frequently use to advertise and sell their goods (such as markets, discount stores, classified and trade papers); and

focusing on identifying the manufacturers and suppliers of counterfeit goods.

However, be aware that privacy and surveillance legislation regulates the gathering and use of some types of evidence.

Enforcement

Once the counterfeiters are identified, the affected company may want to take legal action against them. Using the legal remedies available this can take a variety of forms, from issuing warning letters, to commencing civil proceedings or criminal action through to a variety of options in between. It is also important for the industry to liasion regularly with state and a range of other investigative and enforcement bodies.

Border protection

Since many pirated goods are imported from places where manufacturing costs are cheaper, these enable Customs officers to seize products, at the point of entry, that infringe ones copyright or trade marks. By briefing Customs on genuine and unauthorised products, and regularly updating Customs on relevant information, the prospects of a successful seizure are significantly enhanced.

The opening up of the Indian economy coupled with growing competition and indeed growing consumer awareness, would collectively help to check the dangers of counterfeiting, spurious and pirated products etc.

However, to combat the dangers of the piracy or counterfeiting of products etc, we have to learn much more from the experiences and technological developments of others in this field. I, therefore, welcome the involvement of US Chambers of Commerce for today's interactive meeting on this important subject where we may have to learn many things from each other.

I am glad that associations of trade and Industry such as CII, FICCI, ASSOCHAM etc. come forward on a platform to check the growing menace of piracy and counterfeiting and started to play a lead role on an ongoing basis to ensure that the interests of consumers are protected and only safe and genuiue products find their way into the market.

You would be interested to learn, that with a view to promote and protect the interests of consumers, the Department of Consumer Affairs has set up Six Working Groups to look in to different areas of consumer welfare. Of the six groups, one Group is specifically for Counterfeit, Fake, Spurious, and Contraband Products. The other five groups are on (1) Food Safety; (2) Misleading Advertisements (3) Drugs, Pharmaceuticals and Medical Devices : (4) Consumer Health & Safety concerning Tobacco Products and : (5) a Group to formulate the New Acts or amend the existing Act relating to Consumer Interest.

The Working Group on Counterfeit, Fake Spurious and Contraband products comprises not only of the representatives of various stakeholder ministries, but also representatives of CII, ASSOCHAM, FICCI and prominent NGO's. The terms of reference of this group is to identify the problems that the Consumers face in relation to such Products, both indigenous and imported, available in the market; and, to suggest preventive as well as remedial measures to curb the import as well as manufacture and sale of counterfeit, fake, spurious and contraband products in the country.

The recommendations of these Working Groups are expected to help focus on particular areas. I hope the outcome of this "Interactive Meeting on Issues of Piracy and Brand Protection in expanding India US business Potential", organized by FICCI will also help to provide useful inputs for the Working Groups set up by Ministry.