The boom in demand for portable electronics and accessories in India has also provided impetus to a parallel offline and online market for counterfeit products, which includes fakes, stolen and illegally imported products. A lack of measures to avoid counterfeiting, along with bulk procurement at low costs from China, were cited as some of the main reasons for the rise.
For instance, Chinese consumer electronics firm Xiaomi said it seized over 9,000 counterfeit products, worth ₹73.8 lakh in the first half of 2022 alone, whereas only 3,000 products worth ₹33.3 lakh were seized in 2020. “From the Xiaomi portfolio, we have witnessed a heavy piracy of products, such as earphones, chargers, adaptors, and USB cables,” said Muralikrishnan B, president of Xiaomi India.
He told Mint that there are hubs across major Indian cities that deal in the first copies of gadgets. After covid-19, counterfeit products are now being sold on websites and e-commerce platforms, too, he added.
Similarly, Samsung subsidiary Harman International, which sells audio products under JBL, AKG, Harman Kardon, Infinity, and several other brands, announced earlier this month that it had seized counterfeit JBL and Infinity car speakers and subwoofers from shops and manufacturing units in Delhi during raids conducted with the help of police.
The audio company said that its premium products are being counterfeited and sold at drastically “reduced prices” and “diminished quality.”
“In products like wearables and hearables it is very easy to create counterfeit products,'' said Faisal Kawoosa, founder and chief analyst at TechARC. He added that such products can also easily be sourced from China.
He added that their circulation has grown due to the lack of stringent checks by online marketplaces, and though offline markets are the main breeding ground, “anyone can list and sell products (online)”, which has made selling counterfeit easier.
Unlike smartphones, where police can use International Mobile Equipment Identity (IMEI) to track and identify phones, accessories like headphones etc. don’t have the same measures. Furthermore, companies like Apple and Google have built in measures to remotely lock, wipe and track stolen mobile phones. Apple even allows users to keep track of accessories like Airpods through their phones. Such options aren’t available for cheaper accessories, which make up the bulk of India’s market.
Industry experts also warned that counterfeit poses serious financial risks to companies and safety risks to consumers. “Counterfeit goods in consumer electronics are detrimental to economic development leading to problems like risk to consumer’s life owing to poor quality and lack of checks, tarnished brand image, and tax frauds,” said Muralikrishnan.
In September 2019, a report by the Federation of Indian Chambers of Commerce & Industry (Ficci), said that the Indian economy loses ₹1.17 trillion annually due to smuggling and counterfeiting in five sectors, including consumer electronics. Since then, the domestic accessories market — which comprises true wireless earbuds, wireless and wired headphones, power banks, smartwatches and portable speakers — have only grown, providing even more impetus to counterfeiters.
Many offline retailers are deliberately stocking and selling counterfeit products to cater to customers looking for low-cost products, warned Manish Khatri, partner at Mahesh Telecom, a Mumbai-based mobile retail store.
“Retailers like us only sell branded products. However, there are many retailers that only sell accessories, and many of them sell counterfeit products to customers who want branded products at low costs. Consumers may not be knowing but retailers know which products are fake and which real,” he added.
He also said that a lot of fake products, like watches, speakers and earphones, are sold in the name of Indian brands, like Boat and Noise.
Kawoosa pointed out that homegrown brands selling low-cost accessories are procuring products in bulk from China and selling at huge margins here. The brands, too, turn a blind eye since they see this as an opportunity to build more awareness for their products.