Tim Lince

A study from the Federation of Indian Chambers of Commerce and Industry (FICCI) in India has revealed that the trade of fake goods in the country rocketed from 2011-2012 to 2013-2014. This confirmation that illicit goods are a pervasive part of the Indian economy – estimated to be between 8% and15% of the country’s total gross domestic product (GDP) – serves as a stark reminder that the global trademark community urgently needs to focus awareness and enforcement efforts in the region.

The research was released by FICCI’s Committee Against Smuggling and Counterfeiting Activities Destroying Economy (CASCADE), which was set up in 2011 to explicitly address the growing illicit trade being witnessed in India. The primary aims of the committee are to generate awareness on the hazardous impact of counterfeit products in the country and to assist law enforcement agencies, including judges, the police and customs officials, in the fight against fakes. However, research evidencing the scale of the problem has also been a focus and its recent study, as well as a letter subsequently sent to the government, highlights a number of startling findings:

  • The estimated loss to industry, caused by illicit trade in seven key sectors, rose by 44% between 2011-2012 and 2013-2014.
  • The increase in illicit trade means that it now represents 8-15% of India’s GDP.
  • The tobacco, mobile phones and alcoholic beverages industries are the worst hit.

While the report focuses on smuggling as well as counterfeit goods, the figures make for alarming reading and FICCI is urging the government to lessen the attractiveness of illicit products and trade. For instance, as its research establishes a relationship between high taxes and the availability of illicit products (ie, that high tax rates mean consumers are more likely to turn to illicit products and markets), the organisation is arguing that the tax regime needs to be approached in a way that corrects the imbalance between tax revenue targets and consumer interests.

One reason the issue is on the political agenda could be due to the recent US Chamber of Commerce’s Global IP Center (GIPC) International IP Index, with India ranked poorly in. As we noted in February, the report does praise the sentiment behind the Indian government’s new National IP Rights Policy, implemented last year. However, it adds that overall it “does not address fundamental weaknesses in India’s IP framework”. Last month, the country also remained on the Priority Watch List of the Office of the US Trade Representative’s  2017 Special 301 Report, with a “lack of sufficient measurable improvements to its IP framework on longstanding and new challenges” lamented.

However, brand owners have themselves come under scrutiny and last month we reported on a call – from the government of the Indian state of West Bengal – for trademark owners to be more diligent in reporting suspected counterfeiting to local authorities. Speaking at a FICCI-CASCADE event, Sadhan Pande, West Bengal’s minister of consumer affairs, argued that many brand owners do not take the fight against counterfeit goods seriously.

As we argued, such comments will no doubt be galling for many trademark counsel who spend the majority of their time and limited budgets on the never-ending fight against counterfeits. Moreover, there is likely to be frustration that India’s IP protection infrastructure doesn’t provide more tools for rights holders. However, it suggests that there is a recognition that the threat from illicit trade is on the radar and may indicate a willingness on the part of authorities to collaborate in a bid to fight back. 

As noted, FICCI has shared its findings with policy makers from the Ministry of Finance, Cabinet Secretariat and Prime Minister’s office, urging them to take action to clamp down on the alarming rise in illicit trade. However, it is a report that brands should also be aware of – even if it makes for depressing reading and merely confirms the scale of the problem they face.

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