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ACMA voices concern over spurious auto components

Our Bureau

COIMBATORE, July 10

LEGISLATIVE measures in the judicial system for protecting the interests of consumers, industry and trade, have failed to fix the manufacture and trade of auto component duplicates - `a cognizable offence', according to Automotive Component Manufacturers ' Association of India (ACMA) sources.

A recent study by the National Council of Applied Economic Research (NCAER) on spurious auto parts revealed this trade robbed the Central and State Exchequers revenue worth crores of rupees.

According to the observation made by the NCAER, duplicates enjoy a `parallel market' with their original equipment (OE) brands, owing to the non-application of the provisions of cognizable offence to these duplicates. A number of factors boost the presen ce of spurious components, namely, an adequate number of OE components in the replacement market, higher latent profit margins in the duplicate trade and finally, the presence of a good number of garages and mechanic workshops openly dealing in spurious components, having won the confidence of their regular customers.

While the profit margin on spurious components range from 17 to 26 per cent, the OE brands earn only about 3 to 5 per cent at the retail outlets.

Spurious components escape financial imposts. As the replacement market is highly price sensitive, the availability of the spurious components at just about one-third the price of the OE component gives a fillip to such spurious activity.

The NCAER observed that there were three types of automotive components available in the replacement market: Spare parts made by the OE suppliers, local brand spare parts manufactured and sold under brand names other than OE and spurious parts manufactur ed locally and sold under popular OE brand names.

The trade in duplicates is conducted through traders who stock spurious goods and wait for shortage of OE parts to occur in the market. `The whole operation is well-knit. The ultimate link in the chain of spurious activity is the mechanic', the report a dds.

While emphasising the need for immediate implementation of the new Act, the NCAER stressed the need for a law for small businesses and panel provisions against unfair trade practices.

Apart from suggesting certain fiscal norms such as reduction of excise duty, the study suggested a host of measures to curb spurious trade in auto components, which included, among others, the need to conduct a comprehensive survey to delineate the defau lting units, compulsory registration of component manufacturers in the State in which the unit operates, periodic inspection and checks by vehicle manufacturers and finally categorising trading in spurious component as a `cognizable offence'.

Mr. L. Ganesh, Vice-President, ACMA expressed concern over the growing spurious parts trade estimated at 30 per cent of the total auto components trade. To educate the consumers, he said, the Confederation of Indian Industry (CII) proposed to organise a seminar during Auto Focus 2000, scheduled between August 3 and 6 at the Intec Fair Grounds in Coimbatore.