Growing at a compounded annual growth rate of almost 40-45 per cent, the counterfeit luxury products market in India is likely to more than double to Rs 5,600 crore from the current level of about Rs 2,500 crore, apex industry body Assocham said today.
“Market for fake luxury goods in India is growing at twice the growth rate of genuine luxury products and is largely being driven by web shopping portals that account for over 25 per cent of the fake luxury goods market in India,” according to an analysis of the trade in counterfeit luxury goods conducted by The Associated Chambers of Commerce and Industry of India (Assocham).
The size of counterfeit luxury industry in India is currently about five per cent of the overall market size of India’s luxury industry which currently is worth over $8 billion according to an Assocham-Yes Bank study titled ‘Indian Luxury CEO Survey,’ released just last year.
With a share of about seven per cent, fake luxury products account for over $22 billion (bn) of the global luxury industry worth about $320 bn.
“Over 80 per cent of the entire imitation luxury products in India come from China,” said D.S. Rawat, secretary general of Assocham while releasing the chamber’s analysis. “Majority of counterfeit luxury goods sold comprise handbags, watches, shoes, clothes, hats, sunglasses, perfume and jewellery.”
“More corrective measures need to be taken to lock down the emergence and continued existence of counterfeit goods market in the form of effective intellectual property enforcement, plugging loop holes in the legal & judicial structure and higher conviction rates since the absence of these measures collectively lead to the global brand‘s equity getting diluted and reduced consumer trust in their brands,” said Mr Rawat while expressing concerns over sizeable revenue losses borne by global luxury retailers as fake products cause major hurdles for them in conducting operations in India.
“There is an urgent need to educate customers on brand heritage and create awareness about original products as they cannot be substituted,” added Mr Rawat.
“Certification of authenticity and quality of products by luxury goods makers, digital serialization/authentication, multi-channel protection program and inclusion of appropriate technologies into product or label are certain effective tools which can be employed by luxury goods’ manufacturers to combat counterfeits.”
With the online luxury market worth about Rs 17,000 crore growing at over 20 per cent CAGR, internet has surely evolved as one of the most powerful means for counterfeiters as it provides them with simplified additional channels to promote and sell fake products to consumers, highlighted the Assocham analysis.
“Many aspiring consumers not able to afford originals deliberately purchase counterfeits as global websites selling fake products ship them after receiving online payment,” said Mr Rawat. “Most of these websites delivering fake luxury stuff in the country have their domain names registered outside India’s jurisdiction.”
“The luxury brand owners and online service providers need to work in tandem to address the sale of counterfeits and protect trademarks over internet,” he added. “Shopping websites should also take concrete steps to educate their users about sale-purchase of fake products and its repercussions.”