Counterfeiting, Piracy and Smuggling in India – Effects and Potential Solutions (2013)

Counterfeiting and piracy is a global problem of enormous scale, impacting virtually every industry sector around the world. India is no exception, suffering significant economic and health and safety consequences as a result of widespread counterfeiting, piracy and smuggling in the country.

Small businesses, knowingly or unknowingly buy counterfeit technology or equipment, and suffer unanticipated costs in breakage, business downtime, and unenforceable warranties. Foreign investors are reluctant to invest when the return on investment of a new product is made more uncertain by unenforced intellectual property rights. Of even greater concern, individual consumers risk health and safety as they are duped into buying faulty automobile parts or unsafe medicines. Governments themselves have been victims of counterfeiters as fake repair components find their way into military aircraft and equipment.

In India, the Government has initiated steps to address counterfeiting, piracy and smuggling. Two major efforts stand out. First, the legal framework is fairly well developed in India. Second, the government has taken steps to protect consumers’ health and safety from dangerous counterfeits through significant education efforts. Despite these actions, a study by FICCI shows that counterfeit, piracy and smuggling rates remain high. For example, across seven industry sectors reviewed in the FICCI report, unauthorized or counterfeit/smuggled goods sales caused average sales losses to rights holders of 21.7% in 2012.1 There are multiple reasons why counterfeiting and smuggling continues to increase in India. Conflicting government priorities, lack of adequate resources to deal with a multitude of critical issue, a lack of political will to deal with the problem and even a sense among some that counterfeiting and smuggling is a “victimless crime.”

In a study conducted by BASCAP in partnership with FICCI CASCADE, including direct interviews with industry representatives in India, all segments of industry called for greater enforcement of trademark and copyright laws and regulations. Enforcement was consistently cited as the key element missing in developing a stronger national intellectual property strategy for India.

There is a clear consensus that the key action needed to stop the trade in counterfeits, pirated and smuggled goods is stronger enforcement of the existing laws and regulations.

FICCI CASCADE and BASCAP have prepared this report to raise awareness of the serious consequences of the increase in counterfeiting, piracy and smuggling in India, and the need for more Government attention to the issues, at the Central, Regional and State levels. This paper briefly reviews the economic and consumer consequences of trademark and copyright infringement; provides specific sector evidence of the scope of the problem in India; and finally, based on interviews with Indian rights holders and multinationals, provides specific recommendations to improve enforcement of IP protection laws and regulations in India.

FICCI CASCADE and BASCAP stand ready to work with the Government, NGOs and industry to initiate the critical discussions needed to address the concerns highlighted here, and to implement the report’s recommendations.