Updated: Jun 22
Today, counterfeiting is a global phenomenon and in varying degrees, it happens in all countries. India, probably after China, ranks second in manufacturing, marketing and use of counterfeit products. After China, India figures most frequently in Counterfeiting and Piracy. One in every three automotive parts is fake and this accounts for 37% of the total market share. The overall counterfeit automotive industry in India has touched a valuation of Rs 1 lakh crore- leading to a cataclysmic revenue loss for the government of around Rs 40,000 crore (ASPA Data) The counterfeit auto parts industry is growing faster than car and bike parts, even when the latter has doubled in the last five years.
Ever since its inception, the counterfeit parts have mirrored the growth of and has nearly become equal to that of the Original Equipment Manufacturers (OEM’s). The 22,000 crore counterfeit auto parts industry is growing faster than the car and bike sales which doubled in last five years. According to the Authentic Solution Provider's Association, the overall counterfeit product industry in India is worth Rs 1 Lakh crore, causing the government loss of taxes of the magnitude of Rs 40,000 crores. While fake parts are quite common in other sectors in Automotive, these are life threatening.
The total auto after-market in 2018-19 grew by 9.6% to Rs 67,491 crore ($10 billion) from Rs 61,601 crore ($9 billion) in the previous fiscal: (ASPA). Worldwide, an estimated 45 billion dollars’ fake parts sales occur annually. As a major factor for all road accidents in India, around 20% are attributed to counterfeit automotive parts and, according to a FICCI-Cascade report. Counterfeit auto components predominate with about 30-40% of the overall after-market for components in retail outlets. At a time of a global slowdown, it is especially reprehensible to Original Equipment Manufacturers (OEM’s) – being responsible for slower growth, rising accidents and tarnished brand image.
Very little administrative/legal intervention or attention has been framed for this sector. The sellers of counterfeit auto parts under the names of reputed Original Equipment Manufacturers (OEM’s)brands not only suffer immense financial loss for the original brands but being in a dominant sector, also poses a great threat to the economy. The marketing of counterfeit products, on the other hand generates hefty profits being 30-40% cheaper, but as they are of poor quality, lead to accidents and death.
According to FICCI CASCADE, 20 percent of road accidents in India are caused due to the poor quality counterfeit automobile parts. The user also suffers hidden losses. Counterfeit engines, for example, consume excessive fuels while a low-quality oil filter often leads to sudden engine failure. Counterfeit brake pads reportedly give way to severe accidents. While the Original Equipment and components are extensively quality-tested and comes with a guarantee for vehicles safety as well as that of the consumers, the counterfeit components are dangerous as they reduce the life-cycle of the vehicles. Making big investments in the industry also becomes less than feasible as investors and companies prefer to stay away from the grey and the illicit market that is robbing the Original Equipment of revenue and customers. As these parts undergo no tests, they can break down any moment. Once fake parts installed they serve to reduce the lifespan of these parts get and it functions for lesser time span.
A legal recourse in the form of a Trade Marks Act, 1999 that allows a fine ranging from 50,000 to 2 lakhs / a possible jail time up to three years, but cannot act as a deterrence. The WIPO (the World Intellectual Property Organization), Interpol, World Customs Organization, and World Health Organization are supporting specific initiatives to support the enforcement side. TRIPS (Trade Related Intellectual Property Rights Agreement) contains a comprehensive legal frame-work for protection of various IPRs. TRIPS has evolved certain standardized norms regarding Intellectual Property Rights, has prescribed uniform procedures for ratifying States to implement through their national laws. India, being a signatory of such agreements, is obliged under Article 253 of the Indian Constitution to implement the same through appropriate national laws. However, not much has been done on the ground and OEM’s continue to suffer.
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