The World of Counterfeit: Implications and way forward

It really amused me when I stepped into fashion street in Pune, when we went for our NDA tour in 2006. The reason was I could buy banyans worth `80, shoes worth `200 and all items at very very low cost. Why such low cost shops are not famous in Kerala was my immediate concern. But I have heard about such a hub where you get all sorts of CDs of new films- Beemapalli in Trivandrum. The same had applied to theen darwaza at Ahmedabad. Theen darwaza was a different experience altogether. It gives you the variety that no shopping complex or mall can give. Not in terms of the ambience, but in terms of the wide range of products that are on offer.

It was the class of Mr Pramod Palliwal, Dean, School of Petroleun Management that made me think the other way round. Things, which we do not look into while buying a counterfeit good.

Is it just shoes and CDs? It is bigger. From the duplicates of the Ferrari to the vital and critical Medicines that we consume, come from these counterfeit producers. Apparels, Drugs, Software, Film CDs, Currency, electrical goods, Currency notes etc. are all faked in this world.

How are these people selling at such low prices? These goods are never taxed. These people produce goods that actually resemble the original product in terms of looks and brand name.

The whole system of smuggled goods industry if checked can bring in crores of money to the exchequer of our country. Although no records are available on it, it is believed that 6% of global trade is in counterfeit goods. India loses taxes of goods worth $ 5 billion annually( (Keshri, 2012).

It is not just about smuggling. Every registered good that comes to you comes from a registered supplier, who again pays tax to the government. The factory that makes this good product will be employing employees with minimum wages specified by government. The raw materials will be sourced from genuine suppliers.

But think of it when it is the low-cost theen darwaza. Where these goods are sourced from? It might be from some foreign countries, terrorist centres. None of the persons in this supply chain pay money anywhere except as bribes to officials. The kids who sell to you are also not paid properly. The margins lie with the bigger businessman who manages to sell his goods by not paying taxes.

If all Indians start buying Chinese goods, or these smuggled goods from Dubai, it’s the Indian taxes that are evaded. In the long run, the bank balance of our government will be reduced. If the government doesn’t have money our country will face the fate of Greece or Europe which has its people ultimately suffering due to the government not having balance.

You may say that taxes to a corrupt government are again harmful. But the taxes not only takes care of money to govt. But a taxed helmet is being checked by Bureau of Indian Standards and is given an ISI mark, so that if an accident happens your head won’t break with helmet. A taxed medicine is checked for its quality.

After all, the genuine suppliers who provide you goods spend handsome money on branding their product. After branding that name, people buy addidas and not adidas. So the loss is for the people who spend money to get their original product reach you. 60 companies start with the name “Nike”, 65 companies with “Rolex”, 217 with “Intel”, 136 with “tata”, and over 400 with “Reliance”(Source: FICCI). Counterfeiting means 600 crores for music industry and 4000 crores for the film industry.

In a way it contributes to Criminal activities by pushing black money into the economy, unemployment, as a consumer you suffer due to the low quality of products ( which may be even death if it’s a medicine), the government suffers due to tax evasion, the good companies which genuinely do business suffer.

Industries have to work with the government to counter this. Strict laws followed by strict enforcement can bring down this crime. Awareness among consumers must be created about these effects on their lives.

Therefore, as consumers, we should contribute our bit to these social and economic problems by not purchasing these goods. It may be difficult for the poorest of poor to quit buying goods, but I am sure those who are privileged to read this article using a computer and internet in your hands can certainly do it.