Rising sales of counterfeit electronics worries companies

Strong demand for portable electronics and accessories in India has led to a flourishing parallel offline and online market for counterfeit goods comprising fakes, stolen and illegally imported products. This has also been helped by inadequate measures to check counterfeiting, besides bulk procurement at lower prices from China, causing worry to companies.

For instance, Chinese consumer electronics firm Xiaomi said it seized more than 9,000 counterfeit products, worth ₹73.8 lakh in the first half of 2022 alone. This is a sharp rise from the full calendar year of 2020 when only 3,000 products worth ₹33.3 lakh were seized. “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 said that there are hubs in major cities that deal in the first counterfeit copies of gadgets. After covid-19, counterfeit products are now being sold on websites and e-commerce platforms, too, he added.

Similarly, Samsung unit Harman, which sells audio products under JBL, AKG, Harman Kardon, Infinity, among 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 police raids .

“In products like wearables and hearables, it is very easy to create counterfeit products,” said Faisal Kawoosa, founder and chief analyst at researcher TechARC. He said such products can also easily be sourced from China.

Kawoosa said that circulation of fake products 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 it easier to sell counterfeit products.

Unlike smartphones, where police can use International Mobile Equipment Identity (IMEI) to track and identify any phone, accessories like headphones 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 the Indian market.

Industry experts also warned that counterfeiting 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.

According to a September 2019 report by the Federation of Indian Chambers of Commerce & Industry (Ficci), the Indian economy loses ₹1.17 trillion annually due to smuggling and counterfeiting in five sectors that includes consumer electronics. The domestic accessories market comprises true wireless earbuds, wireless and wired headphones, power banks, smartwatches and portable speakers.

That said, 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,” he said.

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 them in bulk from China and selling at huge margins in India. The brands, too, turn a blind eye since they see this as an opportunity to build more awareness for their products.