Published on February 18, 2014
How to combat auto counterfeiting in India? How to combat auto counterfeiting in India ? By C S Jeena Disclaimer: Presentations are intended for educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Hologram Manufacturers Association of India (HOMAI). HOMAI does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented. The data used here are from various published and electronically available primary and secondary sources. Despite due diligence the source data may contain occasional errors. In such instances, HoMAI would not be responsible for such errors. © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? HoMAI • Hologram Manufacturers Association of India • Formed in 1998 • Has a strength of 27 Manufacturing, 7 Associate and 5 • Honorary members • Hologram Roster started in Aug 1999: in 2009 was merged with the IHMA’s HIR in the larger interests of the hologram industry © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Agenda Counterfeiting of auto parts Current Indian Scenario Most commonly counterfeited parts & accessories Reason for increase in auto counterfeiting Impact of auto counterfeiting Steps to fight auto components counterfeiting Changes in behavior towards brand protection Formation of team focuses on anti-counterfeiting strategy Selection of right anti-counterfeiting technology Track supply chain at distribution end Monitoring and developing IP strategy Consumer awareness Conclusion © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Auto counterfeiting - scenario in India The grey market percentage for automobile segment Supply of auto components in India Consumption of auto components parts in India Auto component consumption supply GAP 2010 INR 15,446 crore GAP 29.6% INR 21,949 crore *Sources: FICCI Cascade study 2012 (Invisible enemy) / ACMA White Paper “legislative improvement to combat counterfeit auto components 2011) © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Most commonly counterfeited parts and accessories Engine & Exhaust • • • • • • • • • • • • Oil filter Air filter Fuel Filters Oil and Water pump Distribution caps Coolant Transmission fluids Bearings Piston and piston rings Spark plugs Lubricants Sealing rings Suspension & Braking • • • • Steering arms Tie rods Brakes Brake Linings Body & structural • • • Sheet metals Bumpers Windshields Electrical Components • • • • • Alternators spares Head lamps Tail lamps Wipers Starter motor spares © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Reasons for increase in automotive counterfeiting Factors such as: Illegal Manufacturing is growing due to shortcoming of existing legislation and easy availability of material from China to produce counterfeit auto component Inadequate surveillance efforts by brand owner to identify counterfeit products Tampering/Re-packaging: Counterfeit automotive components entering supply chain through local manufacturing, importing from China in form of fake packaging or in original packaging sourced from mechanics or service stations Higher margins: In comparison to genuine auto component makers, a counterfeiter earns 35%-75% Lack of consumer education to identify authentic parts/about the ill effects of counterfeit parts Supply constraints: Lack of easy availability of genuine parts for older variants of vehicles, and sometimes even for new models, leads to counterfeit sales. This may either be a supply constraint at the manufacturer’s end or a strategy at the distributor level to achieve high margins. Lack of tools for law enforcement © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Impact of auto counterfeiting Effect to Govt. • Loss of tax revenue : According to FICCI Cascade survey Indian Government loses approx. INR 22 billion (US $ 496 million) due to counterfeit auto products in FY 2010. • Funding of criminal enterprises : The people that benefit most from counterfeiting are criminals who then use their proceeds to fund other criminal activity of to further their own enterprises. Indicative figure – calculated by assuming an average tax rate and profit margin on these automotive components Source: ACMA and Ernst & Young Research / (source ACMA) © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Impact of counterfeiting Effect to consumer • Loss of Life : The use of counterfeits products result in around 25,400 deaths and more than 93,000 injuries during 2009. 20% of total road accidents in India can be either directly or indirectly attributed to the use of counterfeit automotive parts. • Loss of Jobs: Around 1.5 million jobs lost • Loss of money: According to estimates, the end-users are paying for an additional 109 million litres of petrol and 8 million litres of diesel per annum which can be attributed to use of counterfeit parts. © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Impact of Counterfeiting Effect to manufacturer • Lost revenue: Lost revenue worth US $ 2 billion annually • Lost Market Share: at-least 29-35% market lost due to grey market • Liability: Manufacturer can face potentially crippling law suits as incidents of counterfeiting, tampering, and diversion leading to accidents and death. • Product recall due to counterfeit parts – loss of brand equity: In the last few years major automotive manufacturers were forced to recall their vehicle due to counterfeit auto parts. Source: Product recall http://en.wikipedia.org/wiki/Product_recall © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Steps to curb auto counterfeiting Step 1: Change in approach towards product protection Step 2: Formation of team focuses on anticounterfeiting strategy Step 4: Monitoring and developing IP strategy Step 3: Selection of right anti-counterfeiting technology Step 5: ISO Standards © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Steps to curb auto counterfeiting Step 1: Change in approach towards product protection As a first step, every CEO or Brand owner should take the responsibility of brand attack and make Brand Risk Management (BRM) an intrinsic part of his business plan, review and report © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Steps to curb auto counterfeiting Team to be formed for Brand risk management May comprise of CEO/Brand owner; Brand Managers; Head of Marketing, Product Development, Sales, Logistic, Packaging, Manufacturing or outside consultant accountable for the brand. Periodically review the BRM by analyzing various issues like: Step 2: Formation of team focuses on anticounterfeiting strategy i) Product categories & markets ii) Buyer profiles iii) Supply chain management and SWOT analysis of the counterfeiters Make a customized & integrated solution: This can be done by increasing the participation of co-opting consumer or channel partner and by conducting verification, raids or ensuring strong law enforcement © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Steps to curb auto counterfeiting Step 3: Selection of anticounterfeiting technology (see chart overview of security technologies) Cryptographic Logical Structure analysis Authentication Printed Security Technologies Physical Inks/Taggants OVD / Hologram Identification Serialization Track & Trace *Use at-least one level of overt authentication *Focus on ethical vendor who provide multi layered security solution instead just one technology *To select technology take help of published standards such as ISO 12931 and NASPO © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Steps to curb auto counterfeiting Constant monitoring at distribution channel with the help of anti-counterfeiting technology. Step 4: Monitoring and developing an Intellectual property strategy Planned surveillance program If any infringement is found, take legal action © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Steps to curb auto counterfeiting ISO has published new Standards 12931 to fight against the counterfeit. Step 5: Adopt Standards and best practices Study the best practices adopted by others and constantly review and refine your strategy. Source: http://www.iso.org/iso/catalogue_detail?csnumber=52210 . © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Conclusion While the trade of counterfeit parts has dramatically increased, tackling counterfeits is not impossible. Counterfeiting is a problem that needs to be addressed quickly and decisively. Ideally, as a first move, more effective partnerships should be built between law enforcement agencies and the private sector with focus on intelligence sharing, awareness and product identification training. © 2014 HOMAI www.homai.org
How to combat auto counterfeiting in India? Thank You For more information, please contact C S Jeena Hologram Manufacturers Association of India 21-Ground Floor, Devika Tower 6, Nehru Place, New Delhi 110019, India Email: firstname.lastname@example.org Website: www.homai.org © 2014 HOMAI www.homai.org
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