The Authentication Times Issue 29

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The Authentication TimesIssue 29 The Authentication Times

May 2016 | Volume 10 | Issue 29

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The official newsletter of Authentication Solution Providers’ Association (ASPA)

EmpowEr consumEr to sEEk End to illicit tradE -paswan

Also covers:

Combating FMCG counterfeiting in IndiaJharkhand introduced tax stamps

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The Authentication TimesIssue 29

Dear Reader, Welcome to the 29th edition of The Authentication Times.

The current edition focus on the issue of FMCG counterfeit products in India.

FMCG being one of the largest sector in Indian economy is currently facing the heat of counterfeit products. The grey market percentage in the FMCG-personal goods industry has increased from 25.9 per cent in 2010 to 31.6 per cent in 2012. Parallelly, the loss to the industry has also increased to approximately ` 19,243 crores in 2014 to ` 15,035 crores from 2012, attributable to the increase in the industry size as well as grey market percentage.

Our cover story highlights this core issue and details on the kinds of counterfeiting prevalent and its impact along with the factors involved for the increase in counterfeit FMCG products. The story also highlights the usage of various authentication solutions adopted by FMCG companies to counter this menace.

We are please to inform that we had join hands with FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) for content sharing, highlighting their efforts against counterfeiting.

In this issue, you will also find a Q & A with our new member SPROXIL and various other industry updates.

We thank you for your continual support and look forward to receive your feedback.

Sincerely,Chander S JeenaEditor

In this issueViewpoint

Policy initiatives 3

News Bytes 6

Empower consumer to seek end to illicit trade: Paswan

IHMA News 16

Member Interview 18

Market report 22

Industry updates 23

Combating

in IndiaCounterfeiting

FMCG

8

12



Policy initiatives

From February 1, 2016 all liquor bottles in Jharkhand are carrying tax stamps for

liquor revenue and consumer protection. With this, Jharkhand became the 23rd State in country to adopt tax stamps by State Excise Departments. In India, approximately 11 billion tax stamp are used per annum for liquor revenue protection. According to the officials this move would curb manufacture and sale of spurious liquor and black marketing that together give a body blow to the state’s exchequer. According to media sources, Assistant Excise Commissioner Dr. Rakesh Kumar confirmed the department’s move, adding that they were floating a communiqué in this regard for widespread

awareness. The labels will have specific colours based on the drink and an inscription of JH followed by a 10-digit special alphanumerical code, much like the vehicle chassis number,” he said, adding that given the spate of illegal liquor business rampant in Jharkhand despite raids, this move was necessary. The decision to stick the special adhesive label was taken three months ago, he added. “India Security Press, Nashik was selected to provide us with labels of our specifications. As far as distribution of labels is concerned, it is being done through Jharkhand State Beverage Corporation. So, now onwards, the bottles given will bear special stamp indicating its authenticity,” he said.

Each label 75mm long and 15mm wide will be of different colours for different variants. “It’s blue for Indian made foreign liquor (IMFL), red for beer, yellow for country made liquor, green for spicy country liquor, and pink for imported foreign liquor,” an excise official said. With the naked eye, the colour of the label, the inscription JH and the numbers would be seen. But, to verify the authenticity of the label on the bottle on sale, each label will also boast a computerised signature of the excise commissioner, the authorised signatory, which can only have been seen in ultraviolet light.

Source: www.telegraphindia.com

Jharkhand introduced tax stamps for liquor revenue protection

Photo courtesy: Authentication Solution Providers’ Association (ASPA)

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10

Jammu & Kashmir

Uttarakhand

Delhi

Uttar Pradesh

Sikkim

Arunachal Pradesh

Assam

Chhattisgarh

Goa

Karnataka

Kerala

Madhya Pradesh

ManipurMeghalaya

Mizoram

Nagaland

Orissa

Rajasthan

Tamil Nadu

Tripura

Puducherry

Telangana

AndhraPradesh

Lakshadweep

Maharashtra

Gujarat

Daman andDiu

Haryana

PunjabChandigarh

HimachalPradesh

Bihar

Jharkhand

West Bengal

Andaman andNicobar

Sources: ASPA and State excise tender documents.

15 States using full polyester based security hologram

7 States using paper based excise label

1 State using BOPP label

Only state in India which stopped using tax stamps

Tax Stamps in India (2016-17)

Fact file

Population 1.27 Billion (2014)

GDP $ 2.067 trillion (2014)

GDP rank 7th (Nominal) / 3rd (PPP)

GDP growth 7.3% (2014-15)

GDP per capita $ 1627 (2014)

Annual tax stamps consumption: 11 billion

Policy initiatives



russia introduced mandatory fur product marking

Starting from April 1, 2016 to December 31, 2016, EEC countries and Russia are

conducting an experiment to mark fur products with ID tags.

Termed as fur controlling identification mark (hereinafter - Keys), these secure tags will be marked on each product to help authorities to curb counterfeit and tracking of the particular product.

According to the expert community, 80 per cent of this market is in grey area: from 1 million imported from abroad products, only 200 thousand declared and with them, respectively, shall be paid 10per cent customs duties and 18per cent VAT. In Russia in this business there are about 2.5 thousand companies.

These keys are produced by Federal State Unitary Enterprise “goznAK”. These are intended for labeling the form of strict accountability to the members (means) to protect against counterfeiting (security printing) and contains a built-in RFID tag.

Member of the experiment can be ordered Keys in six versions, which differ from each other in size and application method. These Keys are available in two sizes: 53h80 mm (wide version) and 25h160 mm (narrow version).

Further, it is possible to produce three variants Keys each of two sizes - depending on the intended method of application to the product sewn, glued and hinged.

Source: http://www.goznak.ru

Home-made savouries to sport holograms soon

Select savouries available at bakeries and food outlets across Kerala will soon

take a new avatar, sporting a hologram that assures quality. It is part of ‘Bake in Kerala’, an initiative being launched by the Bakers Association Kerala (Bake), an organisation of about 20,000 bakers in the State.

A host of indigenous food items will carry the hologram, after having gone through a lengthy process of quality checks, according to P.M. Sankaran, president of the organisation. The programme aims at imbibing hygienic practices among manufacturers, who cater to the need of bakers. Many of the food items sold at bakeries originate in small households. Taste apart, the hygiene at kitchens is unknown to the consumer. Nor is there a mechanism to ensure it now. The system will get overhauled once the new initiative takes roots, Mr. Sankaran says. The food items to be included in the initial phase include plum cake, cup cake, tea cake, bread, bun, rusk, bakery biscuit, mixture, chips, halwa, unniyappam, kuzhalappam, chikki and vatteppam. The Statewide launch of the programme

was carried out in Ernakulam recently. The districtwise extension is under way. About 25,000 manufacturers are being targeted in the first phase. They will be given training to ensure quality and hygiene. Of course, there will be a premium on the items that carry the hologram, because much effort goes behind it, he explains. Earlier, Bake had launched ‘Bakefit,’ a similar exercise to ensure hygienic practices in ‘bormas,’ the kitchens of bakeries. The Bake certification is given to those kitchens that follow the laid-down standards. A Bake team visits the kitchens with prior intimation initially, but would conduct surprise checks later.

The programme has brought awareness on quality and ushered in the highest standards. The makers of indigenous savouries may continue to remain anonymous, but the quality assurance system will keep their heads high. Perhaps, the net result of the initiative could be a considerable reduction in food-induced health hazards.

Souce: http://www.thehindu.com

Policy initiatives

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News Bytes

The National Bank of Ukraine issued an updated 500 UAH banknote. The National Bank of Ukraine’s Director of Circulation of Money

Viktor Zayvenko emphasized that this bill continues to update the nation’s banknotes, on which work began in 2012 as part of the Strategic Programme to improve the organization of cash circulation in Ukraine between 2013 and 2018.

Victor Zayvenko noted that the revised bill has enhanced security features, including optically-variable effects that are checked when tilting the banknote.“This includes a window tape, partially embedded in the thick paper with a strong kinematic

effect (a change in direction of the background image), and a SPARK element (an image that has some areas with a gradual transition from one color to another),” Zayvenko said.

Source: http://www.coinweek.com

New Zealand had unveiled new new $20, $50 and $100 banknotes which

will be released in May 2016. These banknotes are from its banknote circulation series 7 called as Brighter Money. Series 7 $5 and $10 banknotes were released earlier in October 2015. These new banknotes are upgrade to its series 6 with several new features and enhanced existing features including;

• A larger window features a more detailed metallic element

• The native bird icon changes colour as the note is tilted, and a bar can be seen moving through the space

• A small ‘puzzle number’ lines up when the note is held up to the light

• Raised ink is still used on the large denomination number.

The cost of purchasing and redesigning the new notes is estimated to have cost the Reserve Bank $40 million over five years. New Zealand’s current polymer banknotes were produced by Note Print Australia Limited in Melbourne. New Zealand’s new banknotes will be printed by Canadian Banknote Company in Ottawa.

Source: http://www.rbnz.govt.nz

newzealand unveils new banknotes $20, $50 and $100 banknotes

Bank of ukraine issues new 500 Hryvnia banknote



australia reveal new $5 banknote design

Holostik eyes 20% growth in FY’16, plans expansion

The Bank of Australia unveiled new $5 banknote that will be issued into

circulation from 1 September 2016. The images show the basic design artwork of each side of the banknote. As previously announced, key aspects of the existing design – colour, size

and people portrayed – are retained for ease of recognition and to minimise the disruption to businesses. There is a new ‘tactile’ feature to help the vision-impaired community distinguish between different denominations of banknotes.

Holostik India Ltd, one of the oldest and globally recognised hologram manufacturers is eyeing 20 percent growth in this financial year. Mr. Satyadeep Ray, Director, Holostik India said, Our year end figure stands for FY 2015-16 stands at Rs 1.63 billion which is 14% increase over last year figure. For current year we are expecting a growth of 20 percent for FY 2016-17 to achieve sales target of Rs 2 billion. This will be on the back of our continuous addition to product portfolio. Our Export sales has increased by ~ 25% in FY 15-16. Currently we are exporting to more than 50 countries across the globe. We have devised aggressive growth plans for FY 16-17 and are expanding our foothold in potentially untapped countries. The company is focussed on aggressively increasing its customer and product portfolio in India and abroad. With “Make in India” movement gaining momentum and increasing awareness amongst customers about counterfeited products- HIL is seeing immense growth potential in the coming years and path ahead definitely looks very promising.

Source: www.taxstampnews.com

uflex holography division registered robust growth of ` 3.35 Billion in FY 2015-16

Uflex Holography a division of Uflex Limited, had registered a robust

growth of Rs. 3.35 billion in financial year 2015-16 against the growth of Rs. 3.12 billion in FY 2014-15.

Mr. G.P. Pathak, V.P. (R&D & Operation), Uflex Ltd. said, “The current year growth is good in spite of 25 percent decreases in rate of polyester material compare to previous year. Uflex Holography division turnover was increased by Rs 230 million from

Rs. 3.12 billion in F.Y. 2014-15 to Rs. 3.35 billion in FY.2015-16” The turnover constitutes 75 percent of revenue from Security Products while remaining from packaging and decoration sectors.

Uflex produces its products from its plants in Jammu and Noida. Whilst, the Jammu plant is set-up for the wide web industry, the Noida plant is focused on security including security holograms and labels. New leader and future productsRecently Pankaj Bhasin also joined the organisation as Executive Vice-President of the holography business and will have overall responsibility for the management of the business. For the future Uflex is also looking to develop new holographic products for tobacco, fast moving consumer goods, pharmaceuticals, the carton industry and the development of a holographic thermal film. Source: www.theholographynews.com

Mr. G.P. Pathak, V.P. (R&D & Operation), Uflex Ltd.

contd. on page 16

News Bytes

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Cover Story

FMCG Industry in India:The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy and is estimated to grow from US$ 30 billion in 2011 to US$ 74 billion in 2018. Broadly classified into three categories- Packaged Food or Food &Beverages, Personal Goods and House Care Products, food products are the leading segment, accounting for 43 per cent of the overall market. Personal Care (22 per cent) and Fabric Care (12 per cent) come next in terms of market share1.

Size of Counterfeit FMCG Market in India Measuring the exact size of counterfeiting in FMCG industry is methodologically challenging for various reasons. Firstly, the packaged food sector consists of a large unorganised sector, which is particularly vulnerable to counterfeiting. Secondly, it is an illegal activity and illicit traders attempt to remain invisible and are unlikely to record their activities. Thirdly, due to the nature of industry, most of the times various cases remain unreported in evidence of used products.

by Chander S Jeena

1. India Brand Equity Foundation

FMCG being one of the largest

sector in Indian economy is

currently facing the heat of

counterfeit products. The

grey market percentage in the

FMCG-personal goods industry

has increased from 25.9 per

cent in 2010 to 31.6 per cent in

2012. Parallelly, the loss to the

industry has also increased to

approximately ` 19,243 crores

in 2014 to ` 15,035 crores

from 2012, attributable to the

increase in the industry size as

well as grey market percentage.

This story highlights this core

issue and details on the kinds

of counterfeiting prevalent

and its impact along with

the factors involved for the

increase in counterfeit FMCG

products and the usage of

various authentication solutions

adopted by FMCG companies to

counter this menace.

Combating

in IndiaCounterfeiting

FMCG



Cover Story

However, according to various media reports it is estimated that FMCG sector loss 30 per cent of its business to fake products and 80 per cent of consumers who purchased these products believed that they had bought originals. Further, according to a study by FICCI CASCADE in 2013-14 the estimated loss of sale to FMCG industry was approximately (INR 21957+INR 19,243 crores)2.

Factors responsible for increase of illicit trade in FMCG products In FMCG sector, counterfeiters take advantage of and use advanced technology to imitate original products and replace them with inferior substitutes. These could be contrabands or look-alikes passed off as original products.

There could be various factors driving the illicit trade in FMCG sector, however, the key reasons seem to be as follows; • A large unorganised sector in

the packaged food industry;• Weak regulatory and

implementation mechanism;• High price of branded and

premium products;• Huge income disparities

creating a market for cheap alternatives to the branded and premium products among the low income population.

Impact of counterfeiting in FMCG sectorCounterfeit goods can be dangerous and potentially harm or even kill unsuspecting consumers. These products may contain hazardous and untested ingredients and provide no assurance of safety or efficacy. Apart from the health and safety issues, counterfeit products in the market mean low satisfaction or benefits to the consumers and poor value for their money.

Impact on ConsumersA recent study by the Delhi Institute of Pharmaceutical Sciences and Research (DIPSAR) found that many of the toothpaste manufacturers are adulterating toothpastes and toothpowders with high quantity of nicotine. Out of 24 well-known brands of toothpastes examined, which were produced and marketed by leading FMCG companies, seven were found to contain nicotine, which is expressly banned as the Cigarettes and Other Tobacco Products Act, 2003, prohibits use

of tobacco in any non-tobacco product. Similarly, out of 10 well-known 23 toothpowders, six contained nicotine. The most remarkable aspect of these findings was that the companies involved were leading national and international brands of the FMCG world. Similar cases have been reported from Mumbai and Ahmedabad in which nearly half of all cosmetic and beauty care products sold over the counter (OTC) were found to be fake or spurious and more than half contained harmful ingredients. Ayurvedic products manufactured by some FMCG giants were also found to have misleading information about the ingredients.

This is a scenario when 62 out of the top 100 brands are owned by MNCs, and the balance by Indian companies. Out of these 62 brands, 27 are owned by Hindustan Unilever and the rest by other fifteen companies.

Impact on Government Any counterfeiting activity, whenever it takes place, is bound to impact the Government heavily. Globally, government loses billions of dollars in tax revenue due to counterfeit and smuggled

Industry Sector

Direct Tax Loss Change Indirect Tax Change

2014 2012 INR crore % age 2014 2012 INR crore % agePersonal Goods

1,111 867 244 28% 4,842 3,779 1,063 28%

Packaged Goods

594 552 42 8% 5,502 5,108 394 8%

Table 1: Loss of taxes to Government (in INR crore)

Source: FICCI CASCADE

Industry Sector 2014 2012 Increase/Decrease

FMCG-Personal Goods 19,243 15,035 + 4,208

FMCG-Packaged Food 21,957 20,378 + 1,579

Table 2: Loss of Sales to Industry (in INR crores)

2. FICCI CASCADE

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products. Coupled with the costs incurred in judicial proceedings and various associated law enforcement agencies, the effort and cost entailed by the various governments bodies to seize these goods in gruelling. In totality, Government lose tax, incur higher expenditure on public welfare, insurance and health services as well as consumer distrust, loss of country image and reputation.

Impact on IndustryManufacturers are hit badly by illicit trade. In addition to revenue losses, many other things at stake due to counterfeiting. Some of these include:

a) Loss of trust, goodwill & brand image:

Consumers lose their trust in the manufacturer after buying a fake product unknowingly. For a brand,years of hardwork spent in brand-building is lost due to a single incident of fake or counterfeit activity.

b) Curtail Innovation: Increasing magnitude

of counterfeited and smuggled goods discourages companies to invest and deploy resources in product innovation. According to the FICCI study, FMCG sector is spending very little on innovation. The lack of new copyrights, trademarks or patents in this industry, could be attributed to the fear of lower returns on investments by legitimate manufacturers due to counterfeiting and the growing illicit markets.

c) Loss of Sales: The grey market percentage

in the FMCG-personal goods industry increased from 25.9 per cent in 2010 to 31.6 per cent in 2012. Loss to the industry also increased to 19,243 crores in 2014 from 15,035 crores in 2012,

attributable to the increase in the industry size as well as grey market percentage.

Solutions adopted by FMCG companies Counterfeiters today are tech savvy and can easily produce packaging material similar or better than that of genuine products. But, if there is a problem, there are solutions. In India, consumers do not have any tool/medium to differentiate genuine products from their fake counterparts at the time of purchase. Due to lack of awareness and illiteracy, they rely on the visual appeal and can only check the quality of products with the marking of ISI/AGMARK or FSSAI number. However, with the advancement in digital technology, it has become easy for unethical manufacturers to produce fake ISI/AGMARK/packing products as well. Therefore, there remains

a constant need to spread awareness on ‘How to identify genuine products from the fake ones?’

Technology-based solutions could be one of the strategies to counter the problem. The proven adoption of these technologies by various brand like Patanjali, Mother Dairy and Amul can be treated as case studies. These authentication solutions have multiple benefit as they provide

Cover Story

Proven adoption of authentication technologies by various brand like Patanjali, Mother Dairy and Amul can be treated as case studies



Cover Story

a) Tamper proof packaging;b) Product authentication andc) Tracking and tracing of product

Some of the technological solutions that seem to have worked for the industry are listed below:

i. Visible Features: These are prominently

visible features put on a pack or carton to verify or authenticate a product and difficult to replicate. These also include features that cannot be removed without damaging or defacing the pack. Examples:

• Transparent film wrappers with distinctive designs around a product

• Use of inherently tamper proof packaging like tin cans, tetra packs sealed hermetically

• Breakable caps like those in drinking water and soft drink

• Holograms

ii. Hidden Features: These features enable the

brand owner or grocers to identify and verify a product that may require image scanning devices and may not be detected by the consumers, such as encrypted texts or marks on the product or package.

iii. Trace and Track Technologies:

These involve assigning unique identity to each stock unit during manufacturing, which remains through the supply chain. The identity includes name of the product, the lot number and expiry date. Examples: bar codes, watermarks, taggants (multi-optical layers) unique pack serialisation, nano printing or microscopic application of UV inks which allow invisible printing, etc.

Apart from technology solutions, manufacturers also use other measures like consistent brand packaging to ensure better brand recall value. Frequent changes in packaging can create barriers to identification of products and make a brand vulnerable to counterfeiting.

ConclusionThese efforts seem to have produced results as our estimates show that counterfeiting in packaged foods has come down. Adopting authentication solutions is a win-win situation for all stakeholders as the brand owner and authorities enjoy the revenues and tax/duties respectively and the consumer gets access to the original product. These authentication solutions also help the end consumer to identify the genuine product, in turn winning his loyalty and boosting brand value.

Figure: Example of FMCg brands using authentication security solutions.



Empower consumer to seek end to illicit trade: paswan

Anil Rajput, Chairman, FICCI CASECADEwelcoming Ram Vilas Paswan, Minister of Consumer Affairs, Food and Public Distribution with a green certificate

FICCI CASCADE organized its International Conference on Illicit Trade – Threat to

National Security and Economy on January 15, 2016 in New Delhi. The objective was to facilitate a dialogue between the stakeholders on the alarming magnitude of unfair and practices such as smuggling and other illicit trade practices, and to spread awareness about its adverse socio-economic impact.

The conference was inaugurated by Mr Ram Vilas Paswan, Minister of Consumer Affairs, Food and Public Distribution. TheMinister,

in his inaugural address, said “We have, over the years, initiated several mechanisms to ensure consumer safety and check

unfair trade practices; we must therefore empower consumers to seek discontinuance of such practices. We have to check and substantially reduce the illicit market operations to create a conducive environment for growth and development”. He further stated that India’s role as a global economic powerhouse was increasingly linked to its ability to ensure that rights of legitimate business owners were protected through strong enforcement of laws and regulations. As India continues to take its place as a major economic power globally, its views on

According to the United Nations millions of dollars

from the trade of illicit tobacco reach terror

outfits such as the Taliban and the Al-Qaeda.

From FICCI CASCADE



Release of FICCI CASECADE and Grant Thornton study on ‘Emerging Challenges to Legitimate Business in the Borderless World, L to R Arun Chawla, Assistant Secretary General FICCI; Anil Rajput, Chairman, FICCI CASCADE; Ram Vilas Paswan, Minister of Consusmer Affairs, Food and Public Distribution: Najib Shah, chairman Central Board of Excise and Customs and Dipankar Barkakati, Head FICCI CASCADE.

protection and enforcement of rights domestically will become increasingly important to its international trading partners and to prospective business investors.

The inaugural session was also addressed by Mr. Najib Shah, Chairman, Central Board of Excise and Customs. Mr. Shah observed that there was an urgent need for a structured dialogue between businesses and enforcement agencies to counter the menace of illicit trade. Customs is facing newer challenges with respect to trade in illicit goods. Smuggling and counterfeiting activities that are done at the cost of the honest tax payers is a matter of concern to the Government.

Mr. Anil Rajput, Chairman FICCI CASCADE, stated that Government’s ambitious campaigns such as ‘Make in India’ and ‘Digital India’ could be used to aggressively spread consumer awareness on the importance of promoting the manufacture and sale of genuine products in the country and about cyber-crimes, misuse of e-commerce by unscrupulous elements. However, the focus has to be equally on the

legal and policy measures that need to be incorporated.

Mr. Rajput drew attention to the long established link between illicit trade and terrorism. He said that the activities of the terror group Islamic state, making headlines on all the major news channels, clearly established that the major sources of their funding was the illicit trade in oil, antiquities, cigarettes and a host of other products that the terror group carried out. Some of the extremists involved in the recent Paris attacks by ISIS are known to have been involved in the cigarette trade in the city’s huge open-air markets. He emphasized that the need of the hour was a stern and resolute counterstrike force. “This has many elements starting with greater vigil at the borders, and since we are talking about illicit trade being

a worldwide phenomenon, bilateral and multilateral engagements between nations will ensure greater difficulty if not immobility of illicit products from one nation to another,” he added.

The second stage is to strengthen the enforcement agencies and to work towards removing ambiguities in the law related to illicit products. Punitive action coupled with the right policy framework that disincentivizes this activity wouldsignificantly dissuade smugglers and their likes from making repeated attempts. The third stage is the one where the consumers are made aware of the detrimental impact of illicit products. Consumer awareness campaigns that explain how to differentiate a fake from a genuine product to demanding a copy of the bill from

Counterfeit and smuggled goods in categories such as alcohol, packaged & personal care products, tobacco,

mobiles, autombile and computer hardware rose from Rs. 72,969 crore in 2012 to Rs. 1.05 trillion in 2014.

From FICCI CASCADE



the seller along with the harmful consequences of buying illegal products vis-a-vis a genuine one need to explicitly conveyed.

Dr. A Didar Singh, Secretary General, FICCI,while welcoming the international speakers and delegates to the conference, reiterated the importance oftangible actions to strengthen our laws and to increase enforcement against illicit trade practices to facilitate industry’sgrowth. Dr. Singh stated that we neededan orchestrated strategy with participation from policy makers, industry, civil society and organizations, to work together and comprehensively address this complex challenge.The international conference highlighted and deliberated on

issues such as: Countering illicit market operations – synergies to secure our future; Challenges in the E-commerce Market Place; Border Protection: International Cooperation in Enforcement; and Understanding the value of legal trade practices – Building global competitiveness through Buy ‘Make in India’.

The conference saw a host of notable international speakers from World Intellectual Property Organization, (WIPO), U.S Patent and Trademark Office (USPTO), Japan External Trade Organization (JETRO), Delegation of the European Union to India, Beiersdorf, Sweetyet Development Ltd, Department of Homeland Security-Homeland Security Investigations, USA

etc. It was also addressed by notable dignitaries including Mr. Rajiv Aggarwal, Joint Secretary, Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, Government of India; Mr. P. C. Jha, Advisor, FICCI CASCADE & Former Chairman, CBEC, Mr. Deep Chand, Advisor, FICCI CASCADE and former Special commissioner of Police, New Delhi, Mr. AramaneSaiManohar, DIG, Interpol, CBI-India; Dr. A P Maheshwari, ADG Logistics, Border Security Force and Mr. MangeshKashyap, Deputy Commissioner, Economic Offences Wing, Delhi Police.

On the occasion, FICCI CASCADE released a joint publication with Grant Thornton on ‘Emerging Challenges to Legitimate Business in the Borderless World’.

This report draws attention to the growing complexities associated with illicit trade, making it a cancerous threat to the global economy. It urges stakeholders to look at the drivers of illicit trade; understand both the domestic and international perspectives that require cooperation

L to R: Denis Dambois, Head, Research & Innovation, Delegation of the European Union to India: Udaykiran Devineni, ICE Representative, Department of Homeland Security. Homeland Security Investigations, US Embassy: Dorian Mazurkevich, Senior Counsel, U.S Patent and Trademark, Office, Foreign Commercial Service, US Embassy; Anil Rajpur, chairman, FICCI CASCADE; Louise Van Greunen, Director, Building Respect for IP Division. global Issues Sector, World Intellectual Property Organization and Shilpi Jha, Senior Legal Counsel for Intellectual Property - South Asia, US Embassy.

There is an urgent need for a structured dialogue between businesses and enforcement agencies to

counter the menace of illicit trade. Customs is facing newer challenges with respect to trade in illicit goods,

Smugglint and counterfeiting activities that are done at the cost of the honest tax payers is a matter of concern

to the government.

From FICCI CASCADE



between regional, national and international entities. The report recommends that efforts such as increasing consumer awareness, strengthening of the legal system and investing in research and development can help in combating this menace. It also suggests setting up of a nodal governance agency which can help coordinate national efforts and intelligence against illicit trade.

The discussions at the conference contributed to an integrated vision of national security and public safety, providing an interdisciplinary dialogue which would attract industry regulators, customs authorities, law enforcement, major producers of consumer goods, consumer associations and NGOs. With an underlying objective to deepen understanding of illicit trading activities such as smuggling etc., effective strategies to dismantle illegal business practices by the public and private sectors were also sought.

The international conference ended with the adoption of a declaration by FICCI CASCADE,WIPO, USPTO and EU Delegation to India which stated that:

We shall continue to collectively work and make sustained efforts to eradicate the menace of smuggling and counterfeiting in order to safeguard financial, social and overall wellbeing.

And resolve to:

• Build sensitivity that illicit trade is a major threat to national security and economy

• Deepen the understanding of illicit market for smuggled and counterfeit goods and how criminal organisations are using illicit trade to fund their activities

• Strengthen strategic cooperation with industry, government agencies, international and consumer organisations

• Continue to build awareness that high tax arbitrage and regulationsfuels smuggling and counterfeiting

• Continue capacity building for enforcement agencies and consumer awareness to protect the long term interest of legal industry and sustainable development

• Share intelligence base amongst stakeholders

• Facilitate seamless integration and coordination between inter-governmental agencies and private sector to combat illicit trade

To ensure consumer safety and economic development.

The International conference was attended by over 150 participants from industry, government and academia, legal consultants, technical experts and voluntary consumer organizations, and was well covered by media.

Efforts such as increasing consumer awareness, strengthening of the leagal system and investing in research and development can help in

combating the menace.

Activities of the terror group islamic state, making headlines on all the major news channels, clearly established that the major sources of the funding is illicit trade.

From FICCI CASCADE



IHMA News

Holography trade body welcomes new un anti-counterfeiting report

THE trade body for the global hologram industry has welcomed a new United Nations report that reaffirms the technology’s important role in anti-counterfeiting. The UN Interregional Crime and Justice Research Institute (UNICRI) research report ‘Ensuring Supply Chain Security: The Role of Anti-Counterfeiting Technologies’* reflects the agency’s ‘first effort’ in analysing the impact of anti-counterfeiting technologies on government initiatives to secure legitimate product supply chains. It clearly acknowledges how technologies such as holograms remain important weapons in tackling counterfeiting and securing product authentication in global supply chains. The International Hologram Manufacturers Association (IHMA) says the report is a sobering reminder that the war on counterfeiting remains far from won and is another ‘timely’

wake-up call for those desperate to protect brands and profits around the world.

Welcoming the report, IHMA general secretary Dr Mark Deakes, said: “This is important and timely insight, which throws the spotlight on the massive issue of counterfeiting. “It reminds us of the need for continued investment in technologies and added value track and trace solutions if counterfeiting in global hotspots such as China, India, and Eastern Europe are ever to be checked, let alone stopped. “Brand owners and those authorities responsible for legislation will also welcome this report. “More needs to be done - and quickly - to begin to deal with the problem and this might include increased integration of holograms as part of brand protection strategies.” Increasing adoption of holography reinforces the technology’s position as a pre-eminent security feature in the global anti-counterfeiting fight. Security holograms on items like liquor bottles, tobacco and luxury merchandise will confirm quality and lead to illicit items being seized and destroyed.“Holography has a key role as a highly effective, highly flexible weapon in the ongoing battle to thwart counterfeiters and

fraudsters,” Deakes said. “All involved in the supply chain - manufacturers, distributors, consumers, tax authorities - will be reassured by the presence of holograms on products and recognise the benefits they provide.”

The use of well-designed and properly deployed authentication solutions, as advocated in ISO’s 12931 standard, on authentication solutions, enables examiners to verify the authenticity of a legitimate product, differentiating it from the counterfeits coming out of China. Even those that carry a ‘fake’ authentication feature can be distinguished from the genuine item if that item carries a carefully thought-out authentication solution. *The UN report is available at http://www.unicri.it/topics/counterfeiting/anticounterfeiting_technologies/Ensuring_supply_chain_security_report.pdf

The IHMA’s Dr Mark Deakes welcomes UN report reaffirm important roles

holograms play in tackling counterfeiting

Holography has a key role as a highly effective, highly flexible weapon in the ongoing battle to thwart counterfeiters and fraudsters



IHMA News

upgraded Hologram image register delivers improved benefitsmove supports iso 14298

FASTER online registration and copyright checking of

hologram designs is provided with the International Hologram Manufacturers Association’s (IHMA) newly updated Hologram Image Register (HIR).

The HIR is a centrally held database operated under the strictest confidence and security. Manufacturers and producers are able to register their holograms, enabling them to check that production designs do not inadvertently copy existing ones and infringe copyright.

In a move to improve efficiency, HIR registration is now a fully online process where artwork can be submitted electronically providing quicker design checks. The registration process is also faster as no hard copy forms are required while internet access via a secure portal provides improved ease-of-use.

IHMA general secretary, Dr Mark Deakes, said: “The enhanced system is a beneficial step forward, representing a major update and redesign of the HIR requirements to reflect more accurately the way today’s holograms are designed and used.

“Furthermore, as manufacturers become ISO 14298* accredited, we are pressing for wider hologram registration. Pre-origination checks on a hologram register and registration of holograms onto a register are required by Intergraf and NASPO, the two leading global bodies for accreditation of the standard.”

Administration of the HIR is by the Counterfeiting Intelligence Bureau while the IHMA is made up of more than 90 of the world’s leading hologram companies.

Source: www.ihma.org

contd. from page 7

The Governor, Glenn Stevens, said:‘Innovative new security features have been incorporated to help keep Australia’s banknotes secure from counterfeiting into the future. As can be seen in the images, these include a distinctive top-to-bottom window. Each banknote in the new series will depict a different species of Australian wattle and a native bird within a number of the elements. On the $5 banknote, these are the Prickly Moses wattle and the Eastern Spinebill.’

The designs are the culmination of a process of extensive consultation with subject-matter

experts and the cash-handling industry, as well as qualitative research involving focus groups. Images of the design artwork for the new $5 banknote have been revealed today to

facilitate preparations for the smooth introduction of the new banknotes.

Source: http://www.rba.gov.au/media-releases/2016/mr-16-09.html



Please brief us about SPROXIL Established in 2009, Sproxil invented an anti-counterfeiting technology for brands that empowers their consumers to avoid fake products simply by using their mobile phone and scratch cards. Sproxil is the worldwide leader in terms of actual verifications.

Sproxil is an ISO 27001 and ISO 9001 certified social enterprise that uses mobile technology to combat counterfeiting and increase brand equity with innovative, consumer-focused product protection and targeted marketing solutions. Its award-winning Defender solution helps ensure goods are not counterfeit or compromised, empowering consumers to verify product genuineness by SMS, mobile app, web or voice. Compatible with any tangible item, Defender is widely used by leading pharmaceutical companies to curb the multi-billion dollar counterfeit drug industry. Defender protects products across multiple industries, including personal care, agro-chemicals, automotive aftermarket parts and electrical cables. Sproxil’s mobile marketing and consumer loyalty services help brand owners increase consumer loyalty and differentiate themselves from competitors. The company has been recognized globally for its efforts against counterfeiting and is endorsed by regulatory bodies in Nigeria and Kenya. Sproxil received the U.S. Patent and Trademark Office 2013 Patents for Humanity Award

defender to curb counterfeiting

Anand C. Mehta heads Sproxil’s Indian operation. Mehta is responsible for managing the staff and leading the development and execution of Sproxil India’s expansion plans. He directs the management of the Company’s corporate relationships with customers, vendors, regulators and shareholders. Sproxil India delivers the Company’s award-winning Defender technology to the country, specializing in marketing communications, loyalty program development and anti-counterfeiting. The local operation currently serves multiple industries including Pharmaceuticals, Agrochemicals, FMCG and automotive parts.Mehta has over 19 years of experience in operations management, strategic marketing and business development. Prior to joining Sproxil, he was the Chief Marketing Officer at Motoring Ahead & at Think as Consumer, a growth acceleration and outsourced marketing firm focused on startups and SMBs. Prior to that, Mehta held leadership and management positions including Vice President of Marketing for Schneider Electric India, Vice President of Marketing & BPO for SNSL Ltd. and Associate VP at D-Link India Ltd. In an email interaction with The Authentication Times, he share his views about SPROXIL and its future activities for authentication in India.

Face to face



Face to face

in Information Technology, the 2010 IBM SmartCamp Boston Award and the 2009 Clinton Global Initiative Outstanding Commitment Award. In 2013, Sproxil was named the most innovative company in health care and in 2015 recognized by Frost and Sullivan for Enabling Technology Leadership. Headquartered in Cambridge, Massachusetts, United States, Sproxil has operations in India, Ghana, Kenya, Nigeria, and Pakistan, with the ability to execute projects on six major continents.

What solutions SPROXIL offered for authentication sector?

Sproxil provides 3 key solutions:

a. Sproxil Defender - Protection for Brands & Consumers from Counterfeit, Diverted & Stolen Products

b. Sproxil Informer – Authentication via Global Secure Supply Chain Oversight

c. Sproxil Champion – Authentication via Consumer Loyalty Rewards with Fraud Protection for Brands & Consumers

How are SPROXIL solutions different or unique from other player in the market?

a. Sproxil has developed solutions that extend to brand & customers who are reluctant to adopt the authentication path. It has pioneered champion Loyalty, Rewards & Engagement solution to counter counterfeiting.

b. Sproxil provides a 360 degree feedback mechanism to tackle the problem of counterfeiting tough its third party investigator (TPI) solution.

c. Sproxil’s innovative solutions prevent ensure brands do not face any negative sales impact due to authentication

awareness campaigns.

d. Sproxil has mechanisms to guarantee a ROI for adopting authentication solutions.

What are the key factors which makes your company enter into Indian Market and how do you see this market?

Sproxil entered the Indian market in 2011 after launching globally in 2009. India faces tremendous issues of counterfeiting.

We can segment the problem into two categories: developed markets and emerging markets. Developed markets like the United States and other western countries have been impacted the least, although they are not entirely immune. These countries are equipped with resources and infrastructures that can better combat counterfeiting.

Emerging markets like India can be considered among those nations moderately, but still significantly affected. Various media reports estimate that between 3% to well beyond 25% of drugs are counterfeit. India’s diversity makes estimating the extent of counterfeiting difficult: it can be very high in some areas and marginal in other regions. Additionally, reports are not always reliable: differences in sample sizes, specific locations targeted, and how the studies are conducted make it difficult to further validate data.

Demographics are a key factor in deciding the most vulnerable populations, both globally and locally. Taking the example of Pharmaceuticals typically, a pharmacy that caters primarily to the educated and SEC A consumers is less likely to stock and sell spurious medicines. However, this can only be a guiding aid directing us towards the kind of pharmacies and general locations where spurious



medicines are likely to proliferate. At times, well-meaning pharmacies may unknowingly provide fake medicine to their patients. This is why it is critical for consumers to have the ability to verify that their medicines come from a legitimate and legal manufacturer.

From an industry perspective, what current measures have companies adopted to protect consumers? Is enough being done?

Globally, companies have been very active in protecting consumers in many developed markets. For example, in the United States, strict laws and speedy justice with regulation and enforcement by both the regulators and policing bodies have produced successful results. This has helped to limit counterfeit medications in the U.S.; counterfeiters are more likely to target less well-equipped markets.

Conversely, in emerging markets across Africa, Asia and Latin America, the problem is rampant. However, some countries have undertaken significant efforts to mediate the issue. Nigeria, for example, has made considerable progress combating the problem by mandating and enforcing anti-counterfeiting measures.

Unfortunately, in countries such as India, the absence of enforced mandates from the government and lack of initiative from the industry have derailed any positive impacts. While Indian companies do follow effective anti-counterfeiting measures when exporting to countries where mandates exist, they generally fail to follow the same practice at home.

In India, the typical measures include change in packaging designs on a biannual basis at best, or raids on suspect locations. These measures by themselves are not sufficient by any standard.

What types of solutions and technologies exist to combat fake products?

A variety of solutions have been introduced to combat fake products. Solutions for anti-counterfeiting generally fall into one of the following categories: overt technologies, covert technologies, forensic techniques and serialization.

It is important to select the technique that best suites a particular product. Additionally, use of multiple techniques and technologies is generally recommended. Consideration of what techniques should be used must include the products’ application, marketplace, level of consumer awareness and the consumer’s ability to distinguish genuine versus fake. Also important is the ability to have two-way communication between the consumer and manufacturer to report fakes and provide product feedback. Finally, the cost element is also a critical factor. The cost of the solution per unit and the cost of the product must not be similar. We can’t in practice implement a Rs. 5 solution for a Rs. 10 product, can we?

Face to face

In India, the typical measures include change in packaging designs on a biannual basis at best, or raids on suspect locations. These measures by themselves are not sufficient by any standard.



Face to face

According to you which anti-counterfeiting solution works the best?

First let’s determine the criteria for an ideal anti-counterfeiting solution. In my opinion, the criteria should be: the solution should have the capability to protect the products throughout the supply chain; the end-user must be able to identify fake products; consumers’ ability to determine if their products are genuine cannot be limited by socio-economic factors or education level; and lastly, a communication channel must be present to allow consumers to provide information that can help reduce counterfeiting in the market.

Sproxil developed Defender to meet such criteria. We partner directly with legitimate manufacturers and distributors to append special security labels on their products. Before purchase, consumers scratch the label, revealing a one-time use code, and then text the code to a secure phone number provided on the package. Within seconds, the consumer is notified, via text, if the product is genuine or suspicious. The code is a pseudo-random number generated by a software algorithm with the probability of being guessed at less than 1 per billion. In addition, the Defender system immediately reports fake products to the

manufacturing company to enable fast reaction.

Consumers can also call a 24/7 hotline, use a free mobile app, or visit a website to verify products instantly. It also works with the most basic numeric keypad, so it is accessible for consumers just getting accustomed to mobile phones in developing countries such as India.

In India, some companies have tried using “open codes” on medicine strips & automotive products but that has been met with very limited success since consumers typically don’t read the ‘fine print’ in detail. The scratch label draws greater attention and provides a much greater level of adoption.

The service can be supplemented with our track and trace solution, which provides increased oversight and product protection throughout the supply chain.

The solution also allows for two-way communication between the company and the consumer. The company can use fake product responses and consumer-sourced information to track down the seller of the medicines and initiate action against them. It allows for identification of counterfeiting hotspots for action by the policing authorities.

The Defender solution is not only highly cost-efficient, companies who have been using the service have seen a high return on investment and increase in sales.

However, consumer education on counterfeiting and awareness on tools they can use to protect themselves is critical. Without such education, anti-counterfeiting measures are limited. These awareness efforts cannot be replaced by any technology.

consumer education on counterfeiting and awareness on tools they can use to protect themselves is critical. Without such education, anti-counterfeiting measures are limited.



oEcd published new report on counterfeiting Global trade in fake goods crossed half a trillion dollars’ mark

Imports of counterfeit and pirated goods are worth nearly half a trillion dollars a year, or around 2.5% of global imports, with US, Italian and French brands the hardest hit and many of the proceeds going to organised crime, according to a new report by the OECD and the EU’s Intellectual Property Office.

“Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact” puts the value of imported fake goods worldwide at USD 461 billion in 2013, compared with total imports in world trade of USD 17.9 trillion. Up to 5% of goods imported into the European Union are fakes. Most originate in middle income or emerging countries, with China the top producer.

The report analyses nearly half a million customs seizures around the world over 2011-13 to produce the most rigorous estimate to date of the scale of counterfeit trade. It points to a larger volume than a 2008 OECD study which estimated fake goods accounted for up to 1.9% of global imports, though the 2008 study used more limited data and methodology.

“The findings of this new report contradict the image that counterfeiters only hurt big companies and luxury goods manufacturers. They take advantage of our trust in trademarks and brand names to undermine economies and endanger lives,” said OECD Deputy Secretary-General Doug Frantz, launching the report with EUIPO Executive Director AntónioCampinos as part of OECD Integrity Week.

The top countries whose companies had their intellectual property rights infringed in the 2011-13 seizures were the United States, whose brands or patents were affected by 20% of the knock-offs, then Italy with 15%, and France and Switzerland with 12% each. Japan and Germany stood at 8% each followed by the UK and Luxembourg.

Postal parcels are the top method of shipping bogus goods, accounting for 62% of seizures over 2011-13, reflecting the growing importance of online commerce in international trade. The traffic goes through complex routes via major trade hubs like Hong Kong and Singapore and free trade zones such as those in the United Arab Emirates. Other transit points include countries with weak governance and

widespread organised crime such as Afghanistan and Syria. The report shows trade routes change greatly from year to year as counterfeit gangs spot new weak points.

Source: http://www.oecd.org

Market Report

Figure 1. Seizures of counterfeit and pirated goods: Top provenance economies (2011, 2012 and 2013)

Figure 2. Seizures of counterfeit and pirated goods: Top economies of origin of right holders whose IP rights are infringed (pooled dataset)

China

Hong Kong (China)

Turkey

Thailand

Singapore

India

United Arab Emirates

Morocco

Suriname

Greece

Total

0 100 00080 00020 000 40 000 60 000 120 000 140 000 160 000

2011

China

Hong Kong (China)

Turkey

Thailand

Singapore

India


Morocco

Suriname

Greece

Total

0 100 00080 00020 000 40 000 60 000 120 000 140 000 160 000

2012

China

Hong Kong (China)

Turkey

Thailand

Singapore

India


Morocco

Suriname

Greece

Total

0 100 00080 00020 000 40 000 60 000 120 000 140 000 160 000

2013

Unite

d Sta

tes

Italy

Franc

e

Switz

erland

Japa

n

Ger

man

y

Multip

le

Luxe

mou

rg

Finland

Spa

in

Belgium

China

Unite

d Kinge

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% of total seizures’ values

25%

20%

15%

10%

5%

0%



upcoming events PUblISHeD byAuthentication Solution Providers’ Assciation(ASPA)

eDITorIAl TeAMIssue editor : C S Jeena

Designed & : eyeDeA AdvertisingPrinted by 1250/13, Govindpuri, Kalkaji, New Delhi-19 (India) [email protected] www.artworxindia.in

The Authentication Times is a quarterly newsletter published by ASPA with an aim to provide latest developments, research, articles, patents and industry news to a wide audience related to Authenticatoni in India and World.

The editorial team welcomes your news, contributions and comments. Please send your product updates, press releases, conference announcements or other contributions to ASPA:

21-Ground Floor, Devika Tower 6Nehru Place, New Delhi 110019, IndiaTelfax: +91 (11) 41617369email: [email protected] Website: www.aspaglobal.com

Disclaimer: The data used here are from various published and electronically available primary and secondary sources. Despite due diligence the source data may contain occasional errors. In such instances, ASPA would not be responsible for such errors.

ASPA is the Authentication Solution Providers’ Association formerly known as Hologram Manufacturers Association of India (HoMAI). Founded in 1998 as HoMAI it has now been re-launched in 2014 as ASPA with a mission to provide a platform where authentication solution providers can converge and collaborate to develop customised cutting edge authentication solutions for their customers. For more details, please visit: www.aspaglobal.com

Diverse technologies, common goal.

* ASPA participating events. Meet us at these event’s to know more about us.

Industry updates

CARTOON

CORNER

Date Event Name / Place / Website

24-26 May, 2016 The Annual Forum and Expo on Electronic Identity in Africa Kigali, Rwanda, www.id4africaforum.com

1-3 June 2016 World Custom Organization (WCO) IT Conference & ExhibitionDakar, Senegal, www.wcoomd.org

20-22 June 2016 High Security Printing Latin AmericaMexico City, Mexico, www.reconnaissance.net

19-21 October, 2016 Smart Card ExpoNew Delhi, India, www.smartcardsexpo.com

17-20 November, 2016* Label Expo New Delhi, India, www.labelexpo-india.com

30 Nov–2 Dec 2016* The Holography ConferenceWarsaw, Poland

15-17 December, 2016* International Pack Tech IndiaMumbai, India, www.packtech-india.com

28-31 December, 2016* Wine and Spirit Show 2016Hotel Taj Bengal, Kolkatta.Email: [email protected]