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Last Updated: Wednesday, 22 August 2007, 22:13 GMT 23:13 UK
India steps up fight against piracy
Karishma Vaswani
By Karishma Vaswani
India business correspondent, BBC News, Mumbai

Piracy in India costs foreign businesses millions of dollars in losses every year.

Sivaji still
Bollywood films have been widely pirated

Indian industry leaders say that rampant piracy threatens intellectual property rights and scares foreign investors from coming to the country.

But as the Confederation of Indian Industry holds a conference to discuss the issue, cracking down on the problem is far from easy.

From the latest blockbuster to the newest bestseller, you can buy anything your heart desires on the streets of Mumbai.

The problem you may face, however, is that more often than not, the products are pirated.

Walk down the famous stretch of the Colaba Causeway in Mumbai, right behind the Taj Hotel and the Gateway of India, and the lanes are peppered with little stalls selling you the latest Hindi and Hollywood hits.

But bring out a camera and the vendors quickly start packing their loot away, terrified of being caught.

Akash, the bootleg bookseller
Akash sells bootleg books and CDs on the streets of Mumbai

Stop at one of the traffic junctions by Haji Ali Mosque and the scene is no different.

Barefooted lads aged between 10 and 20 dodge oncoming traffic, carrying stacks of counterfeit books to sell to passengers.

One of the counterfeit booksellers is 12-year-old Akash.

He hid his face behind a fake copy of Khaled Hosseini's latest novel, A Thousand Splendid Suns, to avoid being recognised by family and friends.

He is well aware that the books he is selling are illegal, even going so far as to say that I could get a much cheaper bargain if I bought a whole lot all together.

Police crackdown

Its estimated that foreign businesses lose $500m (250m) every year in India because of piracy.

Sanjay Mohite, DCP, Mumbai Police
It's becoming difficult for us to tackle this issue
Sanjay Mohite, Deputy Commissioner, Mumbai Enforcement Division

Indian police are making some efforts to crack down on the crime.

We accompanied members of Mumbai's police force on an undercover raid.

But there are some very strict guidelines police here have to follow before they can go ahead with a raid.

Indian law stipulates that inspectors need to get a tip-off or a request from someone who owns the copyright in question before they can conduct a raid operation.

This makes it challenging for law enforcers to arrest those allegedly selling pirated goods. Still, on average, hundreds of undercover raids are conducted every year.

On the raid we witnessed, 2,000 fake DVDs and software CDs were recovered.

Among the films recovered were the latest Bollywood blockbuster, Chak De India, starring Indian superstar Shah Rukh Khan.

Microsoft Office was a popular pirated product amongst the software CDs.

Difficult problem

Authorities say the war on piracy is far from over.

Compact discs
CD piracy is a growing problem worldwide

"It's becoming difficult for us to tackle this issue," Sanjay Mohite, the Deputy Commissioner of Mumbai's Enforcement Division, says.

"The large-scale participation of pirates involved in the trade, and large purchases from the consumers, makes it very challenging. We are getting better at it, but more needs to be done to raise awareness on the issue as well."

Music and movies are some of the worst-affected industries by piracy in India.

Experts say half of the music sold on the streets is illegal, while 60% of movies sold in India are allegedly fakes.

Software companies, though, are bearing the brunt of the piracy trade. Figures indicate that 74% of software sold in India is counterfeit.

Change of policy

The head of Microsoft's legal division in India, Rakesh Bakshi, said the problem affected not only foreign technology firms.

Microsoft Windows Vista
Microsoft says it is a victim of software copying

"It is frustrating not just for multinationals like Microsoft, it's also frustrating for Indian companies," he said.

"But the problem will only be resolved once Indian companies realise that piracy also affects them.

"China is an interesting example of this for many reasons. A few years ago, China was known for counterfeit and pirated goods.

"But then China realised that its home-grown companies were quite good in IT, so they needed to make a change.

"Now China still has a higher rate of piracy than India - but they've seen a 6-7% drop in piracy levels, in comparison to 2- 3% in India."

New approach

But things are changing in India, although not in the way most would expect.

 Moser Baer's Boss Harish Dayani
Harish Dayani believes cheap prices can fight piracy

There is one company that is changing the rules of the piracy game in the country.

Moser Baer India is one of the world's largest manufacturers of blank recordable CDs. It claims to have a fifth of the world's market.

This year, it started putting films on its discs and selling them at cheap prices - comparable to pirated versions sold on the streets.

"We decided we had to value-add to make our products more competitive," Harish Dayani, the boss of Moser Baer's entertainment division says.

"Simply manufacturing CDs, we would have seen our margins erode over time. Now with this new business model of imprinting our CDs and DVDs with content, we will operate on small margins, but we will look at a consumer base that is very large.

"Those large numbers are coming from the fact that India is a country of one billion people, with people who own over 100 million television sets in between 30 to 40 million households."

Reformed pirate

Cashing in on Moser Baer's plans is Sunil Patil - a reformed pirate.

He used to sell illegal and counterfeit DVDs on the streets of Mumbai, but higher profits and a fear of the law made him reform.

Reformed book pirate Sunil
Sunil now sells legal, but cheap CDs on the street

He now sells Moser Baer DVDs instead of fakes.

"My customers come here asking for good quality DVDs," Sunil tells me at his small shop in Lamington Road in Mumbai.

"These are good quality and they're not much more expensive than the fakes. So I'm still making a profit, and I don't have to worry about getting caught by the police. "

But Sunil's morality tale is the exception in India.

Thousands still sell pirated goods, hurting its global entertainment businesses.

India will have to do more to rid its streets of piracy to convince the world it is serious about cracking down on the crime.

India Business Report is broadcast repeatedly every Sunday on BBC World.

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