India Fakes Its Way To The Top

When the Moon is in the seventh house, 
And Jupiter aligns with Mars 
Then peace will guide the planets and love will steer the stars 
This is the dawning of the age of Aquarius 
The age of Aquarius
    — From the musical Hair 

The past few months have been probably India’s best time since Independence. Praise, hope, adulation, honorary designations (superpower, et al) and an invitation to sup at the global high table have all been heaped upon the country by a world that’s watching the resurgence of an ancient civilisation. Probably, with a mix of grudging admiration and a dash of envy. So, has India’s time finally come?

Before we get around to answering that question, here’s the central point: India has been trailing China in almost every development parameter by about 10 years. The only exceptions are probably IT and foreign portfolio investments where India has the lead. But, in almost everything else, India is playing catch-up — reforms, infrastructure, trade and foreign direct investment. The betting is that it will take India another 10 years to reach China’s current level of prosperity and state of infrastructure, unless, of course, India resolutely decides to crunch the gap.

The list also includes one rather unsavoury attribute: faking it! India trails China even in the counterfeit and fake products race, but looks set to draw level pretty soon. Sooner than even the 10-year standard in other areas. Take a look at the list of India’s dubious distinctions in this field. The one example topping the list is counterfeit pharma products. Assuming that the Indian pharma market is worth Rs 50,000 crore, the private sector feels that the bogus segment is as large as Rs 15,000 crore, while the government feels it’s only about Rs 250 crore! Only five years ago, the industry had estimated the fake pharma market to be around Rs 10,000 crore. According to a European Union study, based on customs data, 30% of all seized fake medicines in Europe during 2006 originated in India. According to another paper, India tops the world’s counterfeit pharma production, with close to 35% of the world’s supply originating here.

The counterfeit market does not exist in pharma products only. In 2004, Mattel Toys got the Mumbai police to raid various hole-in-thewall manufacturing units across the city and seized Barbie stickers, Tshirts, printing screens and swatches. These swatches would have been used to sell a wide variety of goods — such as, bags and stationery — bearing the Barbie logo and trade mark. Earlier in the same year, Gillette had got the Mumbai police to raid and flush out large quantities of shaving products bearing a counterfeit Gillette brand. The haul was said to be quite handsome and included not only fake Gillette products but smuggled ones as well. According to various surveys, over 35% of the automotive parts sold in India are fake. The value of counterfeit and pirated software is believed to be over $1.5 billion. In all, the total value of the sham market is believed to be around $5 billion.

This has a direct impact on not only government revenues but can have dire consequences for the consumer as well, especially in the case of pharma products. It also has a bearing on India’s position in the global market and the trust that customers repose in products bearing the legend ‘Made In India’. Already China has shown its resolve to the world: a bureaucrat was recently sentenced to death for his complicity in allowing shady units to manufacture sub-standard drugs.

Given the average Indian’s incredible and indomitable entrepreneurial spirit, it was only natural that a section would seize on this opportunity – as long as the market perceives the premium on a product to be high, IPR or no IPR, there will be an incentive to create an assembly line of fake products. Walk down any street in a big Chinese city and you can buy cheap knock-off versions of Mont Blanc pens, Louis Vuitton bags and anything else that positions itself as a premium, luxury product. But, different entrepreneurs see different prospects differently, some of which does not necessarily mean walking on the dark side. Here’s an example of that. A detective agency has been set up in Delhi to tackle the counterfeit problem. Its website reads: “XYZ is an exclusive agency which provides complete solutions relating to all the Intellectual Property Right matters. We have been working for many prominent manufacturers of different branded items and have organised successful raids across the country.”

Innovative ideas anybody?

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