With 12 percent of its citizens engaged in industry, India has some of the toughest copyright laws in the world. Yet knockoff automotive parts still threaten ethical manufacturers there and elsewhere.

“The share of fake automobile parts in India has risen threefold, from 12 percent to nearly 40 percent in the last seven years,” according to The Times of India.

“The market for fake components is worth about Rs 16,500 crore [US$415 million],” explains the op-ed.

India, the most populous democracy, is breeding increasingly more pirated component manufacturing for the rest of the world — which, in addition to violating intellectual property (IP) rights, is hurting development and so leading to a lack of confidence in the business environment, adds the author. Add to these the likelihood of research and development (R&D) to suffer, and it’s of little surprise that the country’s businesspeople understand that the labor market, too, is affected by piracy.

For example, a 10-point reduction in piracy between 2004 and 2009 could create 2.4 million more IT jobs for workers, according to an IDC study (via The Hindu Business Line), which also claims that if the piracy rate in software is reduced by 10 percent by 2009, there could be an additional $5.9 billion pumped into the local economy followed by tax revenues hiked by $386 million.

From the most recent IDC Global Software Piracy Study, launched last May, progress was seen in a number of emerging markets, most notably in China, where the piracy rate dropped ten percentage points in three years, and in Russia, where piracy fell seven percentage points over three years. India’s drop in piracy is encouraging, but the high rate is counter-intuitive, given India’s big export market for custom-developed software.

According to The Hindu Business Line:

The IDC rate, however, measures only PC software and only that consumed domestically. Were the piracy rate lower, it seems clear that India, given its world-class software development skills, could have a much more robust local packaged software market.

To both understand the threat to commerce and already have laws on the books mark a worthy start for a country that has strong trading ties with the United States and Europe. However, laws must be strictly enforced.

And for American automakers, the danger of inadvertently incorporating fake auto parts into vehicles is real and can repel customers, besmirch a reputation and even lead to costly and painful litigation. Until India’s inspectors enforce the law, ethical and intelligent automakers will demand inspection of parts to ensure failures do not occur. Auto parts buyers will have to think more in terms of quality and secondarily on cost.

If an automaker needs help with inspection, this task can be outsourced (not offshored) by contracting with inspection providers. Ohio-based Mobius Sorting LLC, for example, has a trained staff that visually inspects, gauges and reworks automotive parts. “The staff looks for multiple defects and tracks all information,” according to the firm’s Web site, which also claims to inspect and gauge 50,000,000 automotive parts per year. If this service supplier doesn’t operate in your area, there are plenty of others to look into.

Some thoughts on selecting an inspection service:

• Discuss in detail all the minimum specifications a part must possess to pass inspection;
• Determine how much human interaction is required to ensure the devices are maintained;
• Ask for a sample of documentation or reports that you will get;
• Evaluate responses you’ve gotten from other users of this equipment;
• Calculate how much the total system will cost;
• Calculate the anticipated inspection cost per part; and
• Inquire about how much space you’ll have to provide or how quickly the supplier can get parts back to your assembly area.

Discuss these and other questions with your purchasing department, which can add to this list and enable you to get the most bang for your buck. While inspection may seem outlandishly expensive, remember that it’s much more expensive in the long term to issue/perform recalls and disappoint customers.

Resources

Pirates at Large
The Times of India, Sept. 27, 2007

Piracy Watch: Business Software Alliance Sounds Caution
by Koshy Samuel
The Hindu Business Line, Oct. 1, 2007

Fourth Annual BSA and IDC Global Software
Business Software Alliance and IDC Global, May 2007

Inspection Trends
American Welding Society

Mobius Sorting LLC