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Effective regulation is the key to fight counterfeiting: Manoj Kochar
Interviews- Oct 18,24
In this free-wheeling interview with Rakesh Rao, Manoj Kochar, President, Authentication Solution Providers Association (ASPA), discusses ill-effects of counterfeiting and steps to be taken to combat this menace.
Counterfeiting is widespread, but certain industries are particularly vulnerable. FMCG and pharmaceuticals are among the hardest hit. According to a report of ASPA (Authentication Solution Providers Association) and CRISIL, 20-30 per cent of FMCG products in India are estimated to be counterfeit, causing massive losses for legitimate businesses. Similarly, in the pharmaceutical industry, about 10-20 per cent of medicines are thought to be counterfeit; posing a serious health risk, says Manoj Kochar, President, ASPA, during this free-wheeling interview with Rakesh Rao.
What role does ASPA play in the industry?
Authentication Solution Providers Association was officially formed in 2014 to represent companies offering authentication and anti-counterfeiting solutions. However, its roots go back to the Hologram Manufacturers Association of India (HOMAI), which was established in 1998. HOMAI was initially created to regulate the hologram industry’s growth and promote innovation in technology.
But over time as the industry evolved, it was clear that focusing solely on hologram technology was limiting. New technologies (such as RFID, QR codes, and digital authentication tools) emerged offering enhanced capabilities for fighting counterfeiting. To reflect the expanding scope of solutions and incorporate these new advancements, the association decided to rebrand and expand HOMAI’s role to become ASPA in 2014, covering a broader spectrum of authentication technologies.
When ASPA was first established, it had around 20 members. Today, it has grown to over 80 members, covering diverse authentication and security technologies. ASPA includes material suppliers, technology developers, and equipment providers, creating a comprehensive ecosystem. This growth reflects the association’s efforts to unite the industry and provide an integrated approach to tackling counterfeiting.
ASPA is highly proactive in engaging with brands, regulators, government bodies, and industry associations. One of its major focuses is raising awareness about the perils of counterfeiting and providing platforms for knowledge sharing.
What is the significance of ASPA’s 2022 report on counterfeiting in India?
ASPA’s “State of Counterfeiting in India 2022” report, developed in partnership with CRISIL, provides detailed insights into the scale and impact of counterfeiting in India. It highlights key sectors affected, consumer behaviour towards counterfeit products, and estimated losses. One striking finding was that approximately 42 per cent of consumers knowingly purchased counterfeit FMCG products due to lower prices or availability issues. This report serves as a benchmark for understanding the current landscape and developing industry-specific solutions.
How do counterfeiters operate, and what motivates them?
The primary motivation for counterfeiters is easy profit. They do not invest time or resources in developing a brand but instead ride on the success of established ones. A typical counterfeiter targets brands that lack robust authentication solutions, producing fake products that look deceptively similar to the original. If a brand implements an effective authentication solution, counterfeiters often shift their focus to less-protected brands. This makes comprehensive brand protection critical.
How does counterfeiting affect industries and consumers?
Counterfeiting is not a victimless crime. It affects consumers, brands, and governments. Consumers are often misled into purchasing substandard products that pose health and safety risks. Brands suffer reputational damage and revenue loss as counterfeit products diminish their market value. For governments, counterfeiting results in significant tax losses, as counterfeiters do not pay GST, excise duties, or income taxes. According to estimates, counterfeiting accounts for around 0.5 per cent of global trade, equating to roughly $400 billion — a value higher than the GDP of several countries.
Which industries are most affected by counterfeiting in India?
Counterfeiting is widespread, but certain industries are particularly vulnerable. FMCG and pharmaceuticals are among the hardest hit. ASPA’s report found that 20-30 per cent of FMCG products in India are estimated to be counterfeit, causing massive losses for legitimate businesses. Similarly, in the pharmaceutical industry, about 10-20 per cent of medicines are thought to be counterfeit, posing a serious health risk. The more unorganised a sector is, greater the chances of counterfeiting. The World Health Organization (WHO) has also highlighted the prevalence of falsified medical products in India, making it a critical issue.
What is the role of regulation in combating counterfeiting?
Effective regulation is key to fight counterfeiting, but its implementation varies across sectors. For example, the pharmaceutical industry in India has seen more stringent regulations due to the high stakes involved. Recently, the Indian government mandated that the top 300 pharmaceutical brands implement QR codes for better traceability. However, sectors like automotive parts, where safety and quality are also crucial, do not yet see the same level of vigilance. Strengthening regulatory frameworks and enforcing them uniformly is essential to curb counterfeiting across all industries.
What measures can companies take to protect their brands from counterfeiting?
Companies can adopt a combination of physical and digital authentication technologies. Physical options include holograms, security printing, and specialised inks, while digital solutions cover QR codes, blockchain traceability, RFID, and NFC (near-field communication) technologies. An effective anti-counterfeiting strategy often integrates multiple layers of security to deter counterfeiters. For instance, a company could combine physical holographic labels with a digital traceability system, ensuring that the product is not only tamper-proof but also traceable throughout the supply chain.
What standards should companies follow when implementing authentication solutions?
One crucial standard is ISO 22383, which provides guidelines on implementing an effective authentication solution and measuring its impact. This standard helps companies craft comprehensive strategies that combine both physical and digital technologies, ensuring robust brand protection. Adhering to recognised standards like ISO 22383 can significantly enhance a company’s ability to safeguard its products and maintain its reputation.
How does consumer awareness play a role in combating counterfeiting?
Educating consumers is one of the most effective ways to combat counterfeiting. When consumers are aware of the risks and know what to look for in genuine products, they become a crucial line of defence. Government campaigns like ‘Jago Grahak Jago’ have been successful in raising consumer awareness about their rights, and a similar initiative could be instrumental in sensitising people to the dangers of counterfeit products. Social media and proactive communication from brands can further amplify this awareness.
What more can the government do to combat counterfeiting?
The government can strengthen enforcement by tightening laws and increasing penalties for counterfeiters. The economic offenses wing, which deals with such cases, often lacks the resources and time to tackle counterfeit incidents effectively. More stringent penalties and better coordination between law enforcement agencies could deter counterfeiters. Additionally, the government could support industry efforts by launching nationwide awareness campaigns, encouraging the adoption of authentication standards, and fostering a collaborative approach with industry associations like ASPA.
What are the latest technological trends in anti-counterfeiting?
The anti-counterfeiting industry is increasingly adopting hybrid solutions that combine physical and digital technologies. For example, holographic labels with embedded QR codes that link to a blockchain-based traceability system offer robust protection. NFC-enabled tags that allow consumers to verify product authenticity using their smartphones are also gaining traction. These advancements not only make counterfeiting more difficult but also enable real-time tracking and consumer engagement, making it easier to detect and report counterfeit products.
How should companies choose the right authentication technology?
Companies should consider factors such as the nature of the product, its distribution channels, and the level of counterfeiting risk. A multi-layered approach is often the best, combining different technologies to create a solution that is both secure and cost-effective. It’s also crucial to work with experienced solution providers who understand the complexities of the industry and can tailor solutions to specific needs.
(With inputs from Sanskriti Ramachandran)
Manoj Kochar
Authentication Solution Providers Association
ASPA
Rakesh Rao
counterfeit
Hologram
RFID
QR codes
pharmaceutical
blockchain
ISO 22383
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