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DISPLAY OF  ‘COUNTRY OF ORIGIN’- REGULATIONS IN DIFFERENT JURISDICTIONS: A COMPARATIVE ANALYSIS

August 12, 2020

By Vikrant Rana and Vibhuti Vasisth

‘Make in India’ and ‘Made in India’ have become popular issues in the recent times. It is a common belief that ‘Make in India’ and ‘Made in India’ are the same and are often used interchangeably in the public and media domain. However, they are two different economic programs. These economic programs have gained more attention ever since the Government has clamped down on imports from China, and banned nearly 59 Chinese apps on the grounds of data security and privacy, while also appealing to consumers to purchase locally made products[1]. Consequent to this, the DPIIT (Department for Promotion of Industry and Internal Trade) had also instructed all e-commerce websites to disclose the ‘Country of Origin’ of all their product listings by August 1, 2020, for non-legacy products and by October 1, 2020, for legacy products.

What is ‘Make in India’?

The Prime Minister of India launched the Make in India initiative in 2014, with the primary motive of making India a global manufacturing hub, while encouraging both, multinational as well as domestic companies to manufacture their products within India[2]. Headed by the Department of Industrial Policy and Promotion Ministry of Commerce & Industry, the initiative targets to raise the contribution of the Country’s manufacturing sector to up to 25% of the Gross Domestic Product (GDP) by the year 2025 from the existing 16%. Make in India has introduced numerous initiatives, from promoting Foreign Direct Investment (FDI), to implementing Intellectual Property Rights (IPR). It has also helped in the development of the manufacturing sector[3]. It marks 25 sectors of the economy which include but are not limited to the Automobile sector, Information Technology (IT) and Business Process Management (BPM). Furthermore, it also seeks to facilitate job creation, foster innovation, enhance skill development and protect IPR.

While explaining the vision behind the scheme, the PM added “Come make in India. Sell anywhere, [but] make in India.”

What is ‘Made in India’?

‘Made in India’ initiative gives an identity to the products being manufactured in India. A product needs to be borne out of Indian factors of production such as land, labour, capital, entrepreneurship or technology, for it to be termed as a product that is ‘Made in India’. This implies that there would be utilization of India’s natural talent and resources as well as generation of employment opportunities for the Indian masses at large. A Made in India product could eventually promote Indian home grown local brands, similar to the Swiss cheese or the German cars. There can also be a potential brand recognition for products arising from the Indian origin. [4] Generally speaking, Made In India would also provide the domestic manufacturers with a platform to compete with foreign products and raise the standards of their products.[5]

When is a product termed as/can be termed as ‘Made in India’?

As mentioned in the preceding paragraphs, for a product to be termed as Made in India, it needs to be borne out of Indian factors of production such as land, labor, capital, entrepreneurship or technology. However, unlike other countries, India is yet to come up with a definite legislation in this regard. Various countries around the globe have particular statutes defining the different parameters and composition percentages required for a product to be called as one originating from a certain jurisdiction, which will be discussed briefly hereunder.

“Country of Origin” Regulations in different jurisdictions: A Comparative analysis

Switzerland

In Switzerland, for a watch to qualify as Swiss Made and carry its trademark, it must have a movement produced and encashed in Switzerland, though only 50% of the value of the components in that movement are required to be of Swiss origin. The laws additionally require the product’s final inspection to be conducted in Switzerland. In 2018, certain luxury watch brands had been outsourcing the manufacturing of components, and in some instances even the complete watches, were being outsourced from China. Some have been open about it, however, the remaining brands were furtive, and their “Swiss Made” label lacked precision. Sources suggested that the practice of producing watch components in China wasn’t strictly new, however, outsourcing complete watches from a different country and selling them under the name ‘Swiss Made’ definitely raised concerns. The Federation of the Swiss Watch Industry (FH), being the trade organisation that protects the use of the ‘Swiss Made’ Label stated that “The use of any Swiss name or symbol on the display can mislead the consumer to believe the watch has been produced in Switzerland. It is a sensitive area, and the Federation seeks to actively protect it and has asked the members to look after the use of Swiss Made.”[6] Subsequently a task force was set up by the Federation to make sure that the rules relating to Country of Origin were respected by all the brands.

Australia

In Australia, under the Australian Consumer Law (“ACL”) certain food products offered or suitable for retail sale will be required to display country of origin information. The ACL doesn’t require non-food products to carry country of origin labelling, although other laws may do so. All businesses, whether they are legally required or choose to display country of origin labelling, are prohibited from making false or misleading representations or engaging in misleading or deceptive conduct about the origin of goods (both food and non-food). In general, for non-food products, the ACL sets out the following classifications to be mentioned on the products: were ‘grown in’ a particular country; are the ‘product of’ a particular country; and were ‘made (or manufactured) in’, or otherwise originated in, a particular country[7].

Canada

In Canada, new Enforcement Guidelines on “Product of Canada” and “Made in Canada” Claims have introduced a distinction between “Product of Canada” and “Made in Canada” claims. Product of Canada claims will be subject to a higher threshold of Canadian content (98%), while Made in Canada claims will remain subject to a 51% threshold of Canadian content. Made in Canada claims should be accompanied by a qualifying statement indicating that the product contains imported content. In both cases, the last substantial transformation of the product must have occurred in Canada[8]. These guidelines provide industry with useful information that would help in ensuring that they are in compliance with the false or misleading representations provisions of the Competition Act, the Consumer Packaging and Labelling Act and the Textile Labelling Act, when making claims about the Canadian origins of their products.

New Zealand

Similarly, in New Zealand, whether a product is New Zealand made will vary depending on the nature of the product and what consumers may understand about it. It is not possible to set out a precise formula as to exactly which products can be called ‘New Zealand made’. However, legitimate considerations include:

  1. for a clothing item, where is it actually changed from fabric into a garment
  2. for a food item, where were the ingredients grown? Were they transformed elsewhere into another food item?
  3. or a manufactured product, is it substantially manufactured in New Zealand? Where were the critical parts manufactured? Are any significant stages of manufacture carried out overseas?

If the product is produced in New Zealand from virtually all New Zealand components then there is little risk in claiming that such a product is ‘New Zealand made’[9]. However, if important components are imported or if part of the manufacturing process is undertaken off shore, then a ‘New Zealand made’ claim risks breaching the Fair Trading Act. Furthermore, breaching the rules as prescribed under the said Act shall also entail monetary damages. In May 2017, a health supplement company and its owner were fined more than $500,000 for claiming that bee pollen of the product was New Zealand-made when the bee pollen was sourced from China. Similarly, a company promoted an office chair as being ‘New Zealand made’. The chairs were assembled in New Zealand using components manufactured in Taiwan, China and Italy to the company’s specifications. The imported components included the base, castors, gas lift, chair adjustment levers and seat and back assemblies. The only parts of the chair manufactured in New Zealand were some incidental parts and the foam and upholstery for the seat and back support. The court held that the representation ‘New Zealand made’ was misleading in this case because the New Zealand input into the chairs was not sufficient to justify describing the chairs as ‘New Zealand Made’[10].

Conclusion

There are a number of Laws and Regulations in India that prohibit false and misleading claims as part of their advertising strategies. These have been enacted to protect the consumers from various forms of exploitation. However, one of the major problem relates with the effective implementation of these Acts, as a result of which, very little or no action is taken[11]. Furthermore, as mentioned herein above, the vagueness in the parameters that are required, which aid in the identification of a product as a “Made in India” product are also presently missing. Considering the given scenario, wherein locally produced goods and products are being actively promoted, and it further seems that the Indian consumers may also prefer locally grown products over the ones imported from other countries, the Government ought to/must come up with definite regulations in this regard.

Also read:

COUNTRY OF ORIGIN TO BE SPECIFIED ON E-COMMERCE WEBSITES FOR PRODUCT LISTINGS

Country of Origin Tag on all Imports

Consumer Protection (E- Commerce) Rules, 2020 comes into force

[1] https://economictimes.indiatimes.com/industry/services/retail/dpiit-to-discuss-country-of-origin-tag-with-etailers/articleshow/76780041.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppstThe

[2] https://www.makeinindia.com/article/-/v/make-in-india-reason-vision-for-the-initiative#:~:text=new%20processes-,Prime%20Minister%20Narendra%20Modi%20launched%20the%20Make%20in%20India%20initiative,their%20products%20within%20the%20country.

[3] https://www.makeinindia.com/article/-/v/make-in-india-reason-vision-for-the-initiative#:~:text=new%20processes-,Prime%20Minister%20Narendra%20Modi%20launched%20the%20Make%20in%20India%20initiative,their%20products%20within%20the%20country.

[4] https://nickledanddimed.com/2016/04/12/make-in-india-vs-made-in-india-a-laymans-guide/

[5]https://www.mapsofindia.com/my-india/government/make-in-india-made-in-india-forming-the-backbone-of-indianeconomy#:~:text=Whereas%2C%20Made%20in%20India%20primarily,in%20the%20manufacturing%20of%20products.&text=Made%20in%20India%20refers%20to,as%20well%20as%20foreign%20markets.

[6] https://www.ft.com/content/8ce9d068-e3e7-11e2-91a3-00144feabdc0

[7] https://www.accc.gov.au/business/advertising-promoting-your-business/country-of-origin-claims#country-of-origin-labelling-for-other-products

[8] https://www.competitionbureau.gc.ca/eic/site/cb-bc.Nsf/eng/02228.html

[9] https://comcom.govt.nz/news-and-media/media-releases/2018/reminder-to-businesses-about-made-in-new-zealand-claims#:~:text=The%20Fair%20Trading%20Act%20(FTA,or%20produced%20in%20New%20Zealand.

[10]https://comcom.govt.nz/__data/assets/pdf_file/0038/89849/Place-of-origin-representations-Fact-sheet-July-2018.pdf

[11] https://consumeraffairs.nic.in/sites/default/files/file-uploads/misleading-advertisements/misleading_advertiesment_and_consumer%20%281%29_0.pdf

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