India's fake luxe market to grow 40-45 percent

Counterfeit, fake and imitation luxury products are increasingly bothering global brands that have a presence in India. Interestingly, the counterfeit market for luxury products is growing twice as fast as the market for genuine luxury products in India. New distribution channels such as online portals are

helping such products reach a huge pool of consumers.

Recently, there were reports about global luxury retailer Louis Vuitton and writing instruments major Mont

Blanc approaching the Delhi High Court after they found that Chandigarh-based ecommerce firm Digaaz was selling duplicates of their products. Both have a filed a case against the portal through law firm Anand and Anand last month.

The counterfeit luxury retail market in India is likely to double to Rs 5,600 crores by 2015 and steps such as effective intellectual property enforcement are the need of the hour to curb this menace, points out an Assocham study.

Fakes find Indian takers

Interestingly, people who buy fakes of luxury brands are not always logo-loving middle classes, even the affluent class makes trips to shops selling duplicates. Whether it’s the M-block market in Delhi's Greater Kailash or Linking Road in Mumbai, customers can bargain for any make-believe luxe product from high-end labels such as Chanel, Michael Kors, Fendi, Gucci to replicas of Louis Vuitton. And they are such true copies of the original that it’s hard to find the difference between a fake Rs 3,500 Lady Dior bag and the real one costing anywhere between Rs 1 lakh to Rs 5 lakh.

“Over 80 percent of the imitation luxury products being sold in India comes from China,” says D S Rawat, Secretary General of Assocham, adding, “Most of these comprise of handbags, watches, shoes, clothes, hats, sunglasses, perfumes and jewellery.”

Another reason why the fakes luxury market is growing at such a fast pace is the advent of e-commerce platforms selling them at lucrative prices. According to the Assocham report, web portals selling fakes account for over 25 per cent of the fake goods market in India. For instance, first copies of these premium brands are easily available on c2coffer.com, an online portal, within a week of official launch of the original collection. Even other platforms like Quikr and OLX offer replicas. While Quikr has a replica Hermes belt for Rs 350, Watchlo.com stocks first copies of around 20 brands, including TAG Heuer, Omega, Rado, Patek Phillipe, Chopard and Bvlgari.

Tackling the fakes issue

“Corrective measures need to be taken to lock down the emergence and existence of counterfeit goods market in the form of effective intellectual property enforcement, plugging loop holes in the legal and judicial structure and higher conviction rates,” opines Rawat.

The fake luxury products market is currently about Rs 2,500 crores. “There is a sizeable revenue loss borne by global luxury retailers as fake products cause major hurdles for them in conducting operations in India,” he added. 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, the study claimed. The counterfeit luxury products market is expected to grow at a compounded annual growth rate of 40 to 45 per cent at least till 2015, it added.

According to a 2012 report on the luxury retail market by Cognizant, brands such as Kate Spade and LV typically hire private investigators to find where counterfeits are sold. On the other hand, Indian stores like Kitsch, offering high-end labels inform the head offices of brands when they come to know about an individual or a store selling copies.

At present, the size of counterfeit luxury products in India is five per cent of the overall market size of the country's luxury industry which is worth 8 billion dollars (over Rs 49,000 crores), according to Assocham. With a share of about seven per cent, fake luxury products account for 22 billion dollars (Rs 1,35,146 crores) of the global luxury industry worth 320 billion dollars (Rs 19,69,920 crores).