Covid-19 has enhanced the use of digital technologies in almost all sectors, but such technologies can also be used to create and sell fake products and services. Often, consumers are caught unaware of the fakeness of the products they are using. Anti-counterfeit technologies can make a big difference here by enabling companies to safeguard their products and services. BusinessLine spoke to Padmakumar Nair, Founder and CEO of digital solutions provider Ennoventure, to know about the latest anti-counterfeit technologies and their market opportunities in India.

Not many are familiar with the idea of anti-counterfeit technology. What’s it all about?

With the digital revolution, more and more people are moving into contactless purchases and delivery mechanisms. Since March 2020, online shopping has grown 74 per cent, as a recent study on consumer behaviour post-Covid done by Nielsen, Caravan and EY has found out.

But the transformation brings threats as well. More than 30 per cent of the drugs we purchase online are fake. More than a million people die every year from counterfeit drugs. With the advances in computer vision and machine learning, it is very easy to copy the design of products packaging making it very difficult for consumers to find the authenticity of the products. The global economic value of counterfeit is expected to reach 2.3 trillion dollars by 2020. Companies have invested heavily on anti-counterfeit technologies to counter this menace. But most technologies don’t reach the end consumers.

What are the latest trends in anti-counterfeit tech?

One of the trends that I noticed is that for the millenials the fake is the new normal. In a country like India, economics is the key factor in purchasing expensive high-end brands. One of the modern cultural trends is that we seem to value access to high-end or high-value brands more than the ownership, so we sign up to different music online/websites or movies online/websites because we want the ability to access music more than we do the physical CDs, etc. Buying a fake designer watch, expensive designer suit or cosmetics is the same: simply because we value the status the brand accords over the thing itself.

There are two types of anti-counterfeit technologies: Overt: Something visible like a hologram, watermark, barcode, QR code; Covert: Not visible to naked eyes. Only using special devices you can identify the hidden codes or information. With Artificial Intelligence and Blockchain taking the center stage, more and more solutions are coming up employing these technologies.

What's the potential of this market in India?

In 2015, FICCI CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy) released a study that says the government lost nearly Rs 6,000 crore to the grey market of FMCG personal goods.

The report also mentioned that 31.6 per cent of FMCG personal goods space is spurious. Nearly 20 per cent of road accidents in India are attributed to fake automotive components, says a study by Nielsen and ACMA (Automotive Component Manufacturing Association Of India). The auto aftermarket is worth ₹40,000 crore. Fakes account for 36 per cent of the pie. Nearly 30 per cent of the drugs sold in India are fake.

Drugs prescribed for cold and cough or a headache are mostly either fake or of poor quality. According to a report released by the World Health Organization in 2017, about 10.5 per cent of medicines sold in low and middle-income countries, including India, are substandard and falsified.

Globally anti-counterfeit solutions are expected to reach $120 billion by 2025. The Authentication Solution Providers’ Association (ASPA), a self-regulated industry body of Anti-Counterfeiting and Traceability Solutions providers, has reported that counterfeiting incidents have risen steadily in the last few years and in 2019 these have increased by 24 per cent as compared to 2018.

The top sectors that see the most numbers of counterfeit cases include currency, FMCG, pharma, content, farming, infrastructure, auto and lifestyle. Amongst these, currency, alcohol and FMCG continue to be the top three sectors with the highest counterfeit incidents in the last two years. FMCG is the most vulnerable of the lot. Counterfeit incidents in the sector went up 63 per cent between 2018 (79) to 2019 (129). Counterfeit products across various sectors in India are causing over ₹1 lakh crore every year to our economy.

How Ennoventure is trying to contribute to this ecosystem? What's your USP?

Ennoventure has come up with a revolutionary technology that can encrypt any information on packaging. The encrypted information is completely invisible to the naked eyes. The technology is patented in the US and it uses AI, cryptography and blockchain. It is a completely cloud-based SaaS solution which companies can implement without any investments in machinery.

Ennoventure’s solution connects all stakeholders in the value chain right from the manufacturer to distributor to retailer to consumer and they can scan the product using their smartphone and validate the authenticity. Ennoventure is enabling the facility even on WhatsApp and consumers can upload the image to a specific number and get the authenticity of the product in seconds.

How's this going to help Digital India?

Counterfeiting activities are not limited to high-end luxury items. Day-to-day items including cumin seeds, mustard cooking oil, ghee, hair oil, soaps, baby care vaccines and medicine are increasingly reported counterfeited by criminals.

A spike in cases being reported about fake hand sanitizers, masks, and PPE kits has been observed during the Covid crisis. Between February and April 2020, more than 150 plus cases of counterfeit incidents had been reported including fake PPE kits, sanitizers and masks.

With the digital explosion in telecom, data penetration is scaling new heights on a monthly basis. India already has 450 million WhatsApp users and more and more consumers want to know the authenticity and provenance of the products they are buying. Ennoventure wants to give the power back to the consumers using our revolutionary technology. It is not just an anti-counterfeit solution, it can provide more information about the product like videos on how to use, composition, side effects.

What are the existing challenges to the growth of this tech in India and globally?

Most of the solutions that are available today require a lot of investment in machinery and are overt in nature. Companies don’t like to invest in these technologies as it disrupts the existing processes within the organization. Also, anything visible has a maximum shelf life of three months and by then criminals copy it. Due to these reasons, companies resist the adoption of these technologies unless it’s forced by governmental bodies.

Tell us about Ennoventure's past, present and plans for the future.

Ennoventure was incorporated in Delaware in the US in 2018. Ennoventure Technologies, fully-owned subsidiary was incorporated in March 2020 to drive global research and development. Ennoventure has been selected by Microsoft for Startups and the collaboration enables placement of Ennoventure’s technology in Microsoft’s Azure marketplace. In addition to that Microsoft will co-sell the product using their sales channels. In 2020 Dubai Future Foundation has shortlisted Ennoventure as one of the promising global startups in the space of AI.

Ennoventure has taken a conscious decision to focus on India as it is the global leader in the export of generic drugs. Ennoventure is entering the US and European markets in Q4 2020.