Counterfeiting will become the crime of the 21 century.

James Moody, former chief, FBI Organized Crime Division

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(International AntiCounterfeiting Coalition 2008)

INTRODUCTION Counterfeits are defined as reproduced copies that are identical to the legitimate articles, including packaging, trademarks and labeling (Kay, 1990). Counterfeiting is a significant and growing problem worldwide, occurring both in less and well developed countries (Matos et al., 2007). Their appeal to consumers is clearly that they look like the real thing, yet cost only a fraction of the price of the original (Rath et al., 2008). The phenomenal growth of counterfeiting causes serious economic and social problems that threaten the lives of unsuspecting consumers, wreak economic havoc and weaken consumer confidence in manufactured or branded products (Tom et al., 1998). According to the U. S. Customs and Border Protection Office of International Trade, 70% of counterfeited goods are fashion counterfeits, such as handbags, watches, jewelry, shoes, clothes, hats, sunglasses and perfumes. Today counterfeiting trade accounts virtually 7% of the global trade (Ergn, 2010). It is growing at the rate of 15% per annum. If it constantly grows at the same rate its value could increase up to $960 billion by 2015 (Frontier Economics, 2011). China is the main producer of the counterfeit products in the world (Hung, 2003). Other sources of the counterfeits are Russia, Argentina, Chile, Egypt, India, Israel, Lebanon, Thailand, Turkey, Ukraine, Venezuela, Brazil, Paraguay and Mexico (Chaudhry and Zimmerman, 2009).
1. ^ "Havocscope Counterfeit and Piracy Markets by Countries". Retrieved April 14, 2010. 2. ^ "Havocscope Counterfeit and Piracy Markets by Products". Retrieved April 14, 2010.

Alphabetical index of all black markets monitored by Havocscope.

Financial Value of Countries Black Markets: $1,933,885.86 Million ($1.93 Trillion) Average Black Market: $21.25 Billion

Country Black Markets Ranking

Black Market Product Ranking

World Black Market Value: $1,652.514.3 Million ($1.65 Trillion) Average Black Market: $32.40 Billion

INDIA India Black Market Value: $16.84 Billion Average Country Black Market: $21.25 Billion

COUNTERFEIT PRODUCTS Lai and Zaichkowsky (1999) define counterfeits as illegally made products that resemble the genuine goods but are typically of lower quality in terms of performance, reliability, or durability. In contrast, pirated goods are products that are exact copies of the original and are typically limited to technology categories, such as software. Counterfeiting is one of the oldest crimes in history. Perhaps the earliest and most widespread form of counterfeiting is that of currency. The counterfeiting of luxury products itself dates as far back as 27 BC, when a wine merchant in Gaul counterfeited trademarks on wine amphorae, selling inexpensive local wine as expensive Roman wine (Phillips 2005).

Today, counterfeiting is an attractive alternative to licit commerce because costs are reduced to manufacturing, transport and distribution. The costs involved in research, design and marketing are all avoided. Because counterfeiters are essentially unaccountable and have no interest in building a brand reputation, costs can be additionally reduced by cutting corners in the production phase, such as employing sweatshop labour, engaging in environmentally unsound manufacturing processes and using inferior-grade materials. Profits can be further maximised by avoiding taxes: import duties are evaded through customs fraud or outright smuggling, and sales taxes are avoided through informal retailing, which itself often makes use of illegal migrants working for little compensation. The end result is a product that can look very much like the original, but which can be sold for much less while generating a larger profit. (United Nations Office on Drugs and Crime, The globalization of crime- A transnational organized crime threat assessment, Austria, June 2010.) DECEPTIVE AND NON-DECEPTIVE COUNTERFEITING Depending upon the awareness among consumers, counterfeiting can be classified into two broad categories: Deceptive and Non-Deceptive Counterfeiting. Research on counterfeiting has acknowledged the differences in the perceptions of counterfeit brands based on the level of awareness among consumers. Some consumers buy a counterfeit brand without being aware of the intellectual property right infringement, signifying the purchase of a Deceptive Counterfeit product (Eisend and Guler, 2006).Producers of this type of counterfeits deceive consumers into thinking that they are buying original products which infact turns out to be made or sold illegally.

Therefore, in this case, consumers behavior of purchasing these products cannot be held accountable as they buy such products unknowingly. However, some consumers are aware that they are purchasing a counterfeit brand, signifying the purchase of a Non-Deceptive Counterfeit product. Since these consumers knowingly purchase the products that are not legitimate, the manufacturers and retailers cannot be blamed for deceiving the consumers (Ang et al., 2001). This non-deceptive purchase of counterfeit products leads to the emergence of the need to understand the reasons for this unlawful behavior

INDIAN SCENARIO In the recent past, Indias economic growth story has attracted worlds attention, which has brought a new set of challenges for the domestic economy. A few of these are counterfeits, pass-offs and smuggling that are threatening domestic brands and industry. The rapid advancement in information communication and technology is further boosting the growth of such illicit activities. All this is (1)Hurting the integrity of the brand thus eroding sales of the legitimate product; (2) Undermining local industry, Discouraging legal imports; and (3) Reducing volume of revenue collection from duties and levies by the State. The situation today has become worse than ever. The :-Counterfeiting is a $650 billion a year problem Grown over 10,000 per cent in the past two decades Indian markets today are flooded with goods imported from all over the world both through legitimate and illegitimate routes. An important effect of these illegally imported goods is that they are not only causing a loss to the national exchequer but also forcing our small and medium industries to close down their operations there by affecting employment growth. SOME FACTSIt is estimated that the government loses in excess of Rs2200 crore (as per ACMA) a year due to sales of counterfeit auto components. This figure is just for one sector, this problem of illicit trade prevails in every sector be it Pharmaceuticals, Cigarettes and Tobacco, Printer Cartridges, Alcohol etc. According to the Report of the FICCI National Initiative against Piracy and Counterfeiting: Share of fake/counterfeit medicines is estimated at 15-20% of the total Indian market. As per some estimates, spurious drugs worth Rs.2500 crores annually are thrown into the market. For soft drinks it is at 10% Fake cosmetics, toiletries and packaged foods at 10-30% 74% of the software and 21.5% of cigarettes sold in India are counterfeit

Much of the above estimated quantum of counterfeit goods and supply is attributable to smuggling. However, it is not possible to quantify smuggling and/or trading of counterfeit goods, as much of it remains un-reported, un-detected, and at times, un-noticed as well. Still then, little that is reported points to an astounding problem ahead of us. For instance, the value of seizures by the Customs last from 2006-7 to 2009-10 portends a serious threat to our economic stability. The estimated value of seizures went up from Rs. 689 crore in 2006-7, to Rs.1752 crore in 2009-10. Narcotic drugs, computer

parts, electronic items, machinery parts, and fabrics/yarn prominently figure in this list. In terms of value, seizures account for approximately 1/3rd of the total detection made by the Customs. A recent study conducted by Business Action to Stop Counterfeiting and Piracy indicates the global value of counterfeit and pirated goods to be likely to grow more than double by 2015. Along with smuggling, counterfeiting and fake have become major contributors towards generation of black money, which in turn encourages criminal activities including terrorism. The market for fake and counterfeit products is thriving in India and has become one of the biggest challenges faced by Indian industry. Not only is it adversely impacting genuine stakeholders, industry, the government and consumers, it is also impacting 'Brand India' globally. At the time when Indian industry is looking to broaden its base, it is challenged by 'Made in India' syndrome - a big and growing international business where all kinds of substandard healthcare, beauty, FMCG and electronic parts are being pushed into the market.

(http://www.mathrubhumi.com/english/story.php?id=125800)

Indian metros have become bases for manufacturing counterfeit products and account for maximum IPR violations. Delhi is the hub of counterfeit products in India as nearly 70 per cent counterfeit products originate there. A FICCI survey has estimated the loss of revenue to the Indian exchequer by way of taxes to be roughly around Rs 1,000 crore a year. FMCG, software, automobile, packaged water, and garments sectors are the most affected by IPR violations, though there are laws in India against counterfeiting, their enforcement is tedious. (http://www.legalserviceindia.com/article/l294-Counterfeit.html)
With this background, industry body FICCI set up a Committee Against Smuggling and Counterfeit Activities Destroying the Economy (CASCADE). FICCI CASCADE has been set up with the participation of leading industries from all sectors of the economy.

A report by the United States Trade Representative (USTR) has named Nehru Place and Palika Bazaar in New Delhi, Richie Street and Burma Bazaar in Chennai, Manish Market, Heera Panna, Lamington Road and Fort District in Mumbai, and Chandni Chowk in Kolkata as markets that need to be watched out for this high-volume trade. The Special 301 Report categorises countries under three separate heads watchlist, priority watchlist and notorious depending on how USTR rates the IP enforcement systems of its trading partner. (http://business-

standard.com/india/news/counterfeit-goods-growing-problem-in-india-ustr/393555/)
India and 12 others Algeria, Argentina, Canada, Chile, China, Indonesia, Isreal, Pakistan, Russia, Thailand, Ukraine and Venezuela are under the priority watch list for 2012. (Source: 2012 Special 301 Report, Office of the United States Trade Representative)

There are many companies who are allying with the governments and enforcement agencies at the national and international levels to devote unprecedented resources to tackle this global problem (International Anti-Counterfeiting Coalition, 2008). These anti-counterfeiting forces , however, seem to be fighting a losing battle, particularly in luxury goods markets, in which consumers often knowingly purchase counterfeits (Nia and Zaichkowsky 2000). Despite the efforts of most luxury brand marketers, the International chamber of Commerce (2004) estimates that this industry is losing as much as $12 billion every year to counterfeiting. This suggests that, at least in luxury markets, curbing the insatiable global appetite for counterfeits is essential for winning the war on counterfeiting (Bloch, Bush and Campbell 1993).