Arun Agarwal, vice president at Authentication Solution Providers Association, tells Chanchal Pal Chauhan about the measures to curb spurious and fake products in the auto industry with the use of latest technology and the new 'mojo tags'.
BT: What is the impact of GST on authentication industry?
Agarwal: As part of the organized industry, the Authentication Solution Providers Association (ASPA), drove a lot of mileage from GST in the long term. We found a lot more opportunity, as the organised sector as well as government wanted to retain the revenue. More than revenue protection, brands are increasingly adopting authentication solutions to empower consumer in their brand protection strategy.
BT: When auto industry gets more organized, how do you foresee your industry growth?
Agarwal: In India the current scenario is changing and certainly the auto giants like Honda, Mahindra, TATA, Maruti, Hundai Mobis, Eicher, Hero Motocorp and etc. have already started using authentication solutions in their OEM and aftermarket parts to curb counterfeit. Tackling counterfeits is the biggest challenge facing the aftermarket today. While the aftermarket is estimated to be worth $ 6.5 billion and growing, almost 36 per cent of the components sold in the aftermarket are counterfeit. Counterfeiting is a major safety concern in the automotive industry. Huge influx of counterfeit products is causing global automotive companies to lose market volume apart from affecting their brand reputation, leading to loss of the revenue. Furthermore, poor quality counterfeit products are compromising the safety of consumers. Over the years, counterfeiters have exploited vulnerabilities in the supply chain to introduce fake parts in legitimate channels, while authentic components are being siphoned off for grey market sale. As a result, Original Equipment Manufacturers (OEMs) and Tier 1 & 2 suppliers need to maintain a high level of control in the supply chain to prevent counterfeit parts from entering the system.
BT: What are the new innovative solutions for Auto / FMCG /Pharma and other industries to fight fake products?
Agarwal: There are various new innovative solutions which we offer and render to various industries in the market. Recently, Honeywell has introduced a specialty label for Genetron 134a refrigerant, which is used in automotive, commercial and industrial air conditioning and refrigeration applications. The specialty label is applied to the top of the product cylinder and is easily seen or scanned. This label has various levels of authentication, including a proprietary machine-readable covert taggant containing a unique signature in the form of an Over Print Varnish (OPV). The label is also tamper evident to eliminate illegal removal and reuse, and contains a unique QR barcode and tracking serial number. The code enables the brand owner and its distribution network to digitally verify, track and monitor their product throughout the supply chain. Consumers are also able to enter the cylinder tracking code online to validate and access data.
In a similar initiative in India, FMCG brand Cargill Foods India has introduced new-age anti-counterfeiting technology in its products. One of which it its popular regional brand - Gemini Cooking Oil. To begin with, the initiative against counterfeiting has been launched in this brand. This anti-counterfeiting technology has a unique feature with a two-way process to check the authenticity of the Tin SKU. This process includes a 3D Hologram of Cargill Foods India, which signifies the authenticity of the product. On looking at this hologram using the phone's torch light, one can see '1865' written - the year of foundation of Cargill Foods India's operations. Besides, the customer can download an app called 'Mojo Tags' to scan the batch code of the product and receive the reassurance of the genuineness of the product. This is the first time an edible oil brand in the country is making use of technology to fight the problem of counterfeiting.
In pharma, many leading companies like Novartis, Sanofi, GSK and etc. are using security solutions like taggant based solutions, serialisation, combination of physical and digital security and covert solutions to fight fakes.
BT: What are new industry trend and what are the challenges which you are facing?
Agarwal: The global market for anti-counterfeiting, brand protection and security packaging technology is forecast to grow strongly during 2017-2022, at a compound annual growth rate (CAGR) of 5.3 per cent to reach $3.65 billion in 2022. There is an increasing use of anti-counterfeit packaging in food and beverage and cosmetic products. The need of hour is active, intelligent and secure packaging. Secured anti-counterfeiting packaging (ACP) has become the first line of defense against un-authorized attempts to steal, replace or modify merchandise of all types. Further, in combination with digital authentication technologies, they are becoming medium for consumer engagement. For us as an industry, the biggest challenge is to stay ahead against counterfeiters and we are committed to bring new, upgraded solutions.
BT: Despite the new technologies intervention why is fake or spurious market growing drastically?
Agarwal: It will be quite a challenge to have a world with no counterfeiting. It is like expecting a crime free society. One can reduce the crime rate but so long as there is greed for more with least efforts it will be difficult to eliminate criminal mind set. In today's "Kalyug" it can be only a dream to have "Ram Rajya like a Satya Yug". The counterfeiters are becoming successful because we are not making their task difficult or in another way we are not making this business less profitable for them. Firstly, the penetration rate of adopting authentication solutions in India is low compared to the western countries. There is a misconception that authentication solutions are costly affair, which is not correct. At association level ASPA is organizing series of awareness workshop for brand owners in different cities across the country. Authentication solutions are cost effective and can be easily integrated with packaging and supply chain systems.
Secondly, there is no government mandate placed in the domestic market. Implementation of tracking and tracing systems, authentication solutions and collaboration of government agencies along with brand owners is a must in this direction. Classic example for this in our country, most of the States Excise Department in India have adopted authentication solutions for liquor, perhaps, there is no mandate even for FMCG, pharma or for baby milk and health products.