Tighter import norms: Not just trade, use of fakes too a crime

NEW DELHI: The next time you walk in through the customs flashing your fake Rolex purchased in Thailand or Hong Kong, you could be headed for trouble.

India has tightened its import norms to ensure fake product that violates design patents do not come into the country even for self use, as the country looks to contribute its bit to check global piracy.

The Central Board of Excise and Customs, the apex indirect taxes body, has amended a three-year old notification to tighten the norms for import of products that have intellectual property rights protection, said a government official.

“The new notification removes the apparent unintended anomaly of prohibiting import of infringing goods meant for trading only. Now even infringing goods imported for use or consumption in India will come under the prohibition,” said Srinivas Kotni, managing associate, Lexport, a legal consultancy firm.

Picking up a medicine not meant for sale in India for self use would also invite trouble.

A penalty of up to five times the value of the goods imported can be levied on an importer under some circumstances and prosecution can also be launched under the Customs Act.

Indian laws prohibited import of goods that infringed trademarks and designs only. In May 2007, the CBEC made changes to extend the protection to other intellectual property rights as well including patents and copyrights. The border measures went beyond the World Trade Organisation, or WTO, requirements under rules on Trade Related Aspects of Intellectual Property Rights (Trips) and brought Indian laws on par with that of the European Union.

The rules prohibited import of goods that infringed copyright, trademarks, patents, designs, and geographical indications. However, there was a lacuna in the law that it applied only to goods imported for sale in India and not the ones brought in for personal use. “Earlier protection was granted only against import of infringing goods meant for trading but now such goods imported for personal use into the country will come under the prohibition,” said Pratik Jain, partner, KPMG.

The Indian industry, however, feels imports of counterfeits is not a big issue and flagged the domestic trade in fakes as a bigger threat to the organised local players.

Leading industry body, the Federation of Indian Chamber of Commerce and Industry, has been lobbying against more stringent action against counterfeits. “We are forming a separate forum to deal with the policy issues on counterfeits and smuggling which will become operational next month,” said V K Topa, Advisor to the secretary general of Ficci.

A report by the World Customs Organisation (WCO) lists India as the second biggest offender in terms of departure countries by seizure numbers. In 2009, the WCO report say, 949 shipments that departed from India were seized, but way behind China that had consignments confiscated in various countries.

Most of these goods were headed to the European countries and Japan. According to estimates by the WCO and the Organisation for Economic Co-operation and Development, approximately 7-10% of global trade is derived from counterfeit products.

The WCO Customs and IPR Report 2009 said there were 13,280 reported cases involving the seizure of more than 291 million counterfeit or pirated articles. A rise in counterfeit products can be observed in the pharmaceuticals sector, and in transport spare parts and high-technology products sector, as per the report.