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The Authentication Times, Issue 37

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Illicit liquor trade poses a serious threat to government, socially
as well economically. Excise duty which is an important source
of revenue is continually under threat from the practice of illicit
trade. Considerable amount of money which could be used to
benefit the government services of a country are being diverted
to the pockets of criminals participating in illegal trading. In
addition, the illicit trade in liquor poses a serious threat to
consumer health.
To counteract it, some State governments have implemented
Tax Stamps as part of their anti-counterfeiting strategy. This
has not only minimized the hooch tragedies and duplication but
has also substantially increased the excise revenue collection in
States.
This issue brings our cover story on “TAX STAMPS
ROLE IN IMPLEMENTING IDEAL STATE EXCISE
POLICY”. Apart from this, the issue also covers interviews,
industry updates & news.
We hope you will find this issue informative and interesting and
as always, we look forward to receiving your feedback.
If you have any news, contributions or comments for the
editorial team, please feel free to email us at info@aspaglobal.
com

Published in: Economy & Finance
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The Authentication Times, Issue 37

  1. 1. 1 The Authentication Times | Issue 37 The Authentication TimesThe official newsletter of Authentication Solution Providers’ Association (ASPA) November 2019 | Volume 13 | Issue 37 Tax stamps role in implementing ideal state excise policy
  2. 2. 2 The Authentication Times | Issue37
  3. 3. 3 The Authentication Times | Issue 37 Editor’s Corner Dear Readers, Welcome to the latest issue of “The Authentication Times”. Illicit liquor trade poses a serious threat to government, socially as well economically. Excise duty which is an important source of revenue is continually under threat from the practice of illicit trade. Considerable amount of money which could be used to benefit the government services of a country are being diverted to the pockets of criminals participating in illegal trading. In addition, the illicit trade in liquor poses a serious threat to consumer health. To counteract it, some State governments have implemented Tax Stamps as part of their anti-counterfeiting strategy. This has not only minimized the hooch tragedies and duplication but has also substantially increased the excise revenue collection in States. This issue brings our cover story on “TAX STAMPS ROLE IN IMPLEMENTING IDEAL STATE EXCISE POLICY”. Apart from this, the issue also covers interviews, industry updates & news. We hope you will find this issue informative and interesting and as always, we look forward to receiving your feedback. If you have any news, contributions or comments for the editorial team, please feel free to email us at info@aspaglobal. com In This Issue Published by : Authentication Solution Providers’ Association (ASPA) Issue Editor : CS Jeena Printed by : Eyedea Advertising, New Delhi The Authentication Times is a quarterly newsletter published by ASPA with an aim to provide latest developments, research, articles, patents and industry news to a wide audience related to Authentication in India and World. The editorial team welcomes your news, contributions and comments. Please send you product updates, press releases, conerence announcements or other contributions to ASPA: 21-Ground Floor, Devika Tower 6, Nehru Place, New Delhi 110019, India Telefax: +91 (11) 41617369 | E-mail: info@aspaglobal.com | Website: www.aspaglobal.com Disclaimer: ASPA in no way endorses the illegal usage of liquor, tobacco, marijuana or other narcotics. The content published is intended for informational purposes only and is not meant to propagate the use of any illegal substance. Chander S Jeena Editor The Authentication Times 4 8 14 16 17 19 22 Tax stamps role in implementing ideal state excise policy Uganda takes a stand for effective alcohol regulation India needs a comprehensive national policy to tackle alcohol and other forms of additives Interview with Sean Worthington, Raidatech Innovation in Authentication ASPA & Member News Center to Allow Scientific Research on Cannabis
  4. 4. 4 The Authentication Times | Issue37 Tax stamps role in implementing ideal state excise policy Enhance revenue, reduce consumption, curbing illicit liquor trade and consumer empowerment & engagement in authentication Introduction: Excise taxes on alcohol & other sin products have long been a dependable and significant revenue source for Policy planners in India. Maximization of Government Revenue to generate resources that can be utilized to finance Departmental projects is always accorded a high priority on the agenda of the policymakers. However, when it comes to framing a policy such as Excise Policy, the Excise & Taxation Department has to give due weight to the health and well-being of the citizens of the State. An ideal Excise Policy, therefore, not only has to strike a delicate balance between the twin objectives of preventing dominance of liquor mafia or social degeneration on the one hand and securing an optimum revenue for the Government on the other, but also has to address the concerns of all the four key stakeholders i.e. the Government, the Manufacturers, the Licensees and most important of all, the Consumer. While there are various other factors that also play a significant role in achieving the State Excise Objective, the article explores the role of Tax Stamps & Traceability Technology Role in State Excise Policy in the current scenario. a) Importance for Excise Revenue for State; post-GST implementation in India: Excise revenue from alcoholic beverages has always been an important source of own tax revenue for states in India. Post GST implementation, its significance has increased as revenue from state excise (from alcoholic beverages) and stamp duty and registration fees (mainly levied on sale of property) are now the major sources where state governments have autonomy to levy taxes. If one were to exclude SGST (rates of which are decided in the GST Council) from states’ own revenues, the share of state excise and stamps and registration fees in states’ own revenues has increased significantly, from around 20% to 40%, in the post-GST regime (see graph). According to Bloomberg thinktank, If all countries increased their excise taxes to raise prices on tobacco, alcohol, and sugary beverages by 50 percent, over 50 million premature deaths could be averted worldwide over the next 50 years while raising over US $20 trillion of additional revenues in present discounted value. Raising taxes and prices further in future years would save additional lives and raise even more revenues Leading Story
  5. 5. 5 The Authentication Times | Issue 37 b) Reduce Alcohol consumption – Socio- economic issues: Maximization of Government Revenue to generate resources that can be utilized to finance Departmental projects is always accorded a high priority on the agenda of the policymakers. However, when it comes to framing a policy such as Excise Policy, the Excise & Taxation Department must give due weight to the health and well-being of the citizens of the State. According to the World Health Organization (WHO), harmful alcohol consumption resulted in more than 3 million deaths in 2016, and most of these deaths occur in low and middle- income countries. Reducing the harmful use of Alcohol is amongst United Nations Sustainable Developments Goals to achieve by the year 2030. The key challenge is to create a fine balance between optimization of revenue while giving proper weight to social consideration and ramifications. Worldwide experts recommended increases taxes for SIN products as one important element to reduce consumption as well as to enhance revenue. Nevertheless, Policymakers face strong opposition to raising taxes on alcohol and other sin products from producers and their allies who persistently raise concerns about the impact of tax increases on revenues, employment, illicit trade, and the poor. However, evidence from around the world demonstrates that these arguments are either false or greatly exaggerated and none justify inaction. Taxes and prices can have a major impact on curbing this illegal trade but need to be supported by strong governance and high-level security. c) Illicit trade as a major obstacle in achieving State Excise Objectives: While the intention of higher taxes is to reduce consumption, this rarely occurs at the ground level. On the contrary, consumption either remains the same, or consumers turn to neighboring states for their consumption or they turn to smuggled or counterfeit products. In India, as the liquor comes under State Excise Policy, the lack of technological tools for identification, monitoring of supply chain, different pricing policy and lack of co-ordination between enforcement authorities create chances for counterfeiters to benefits from pilferage in systems. d) Is Prohibition is the answer to curb illicit liquor trade? Prohibition is not the only answer. Many times, prohibition leads to increased illicit liquor business. For example, Liquor is prohibited in Gujarat, however, according to a recent study 38% of youth in Gujarat consume alcohol. Other than this, 12% of people are consuming other forms of drugs such as cannabis. In the last two years, police had seized liquor valued Rs 254 crore. The Government had confirmed that due to prohibition there is an increase in smuggling from a neighboring state. In the last two years, a total case reported 132415 country liquor, 29989 IMFL liquor. The step has increases the consumption of illicit liquor and loss of revenue. Now the state government is demanding compensation cost from central as they are losing Rs 15000 crore annually due to prohibition. Similarly in other prohibited state Bihar, the sale of Leading Story Source: Hindustan Times
  6. 6. 6 The Authentication Times | Issue37 other drugs products has increased significantly. As per the latest report from the Narcotics Control Bureau, Bihar top the chart in consumption of opium and hashish. In our country, 16 crore people consume alcohol whilst 3.1 crore people use cannabis. Beyond prohibition, India needs a comprehensive national policy to tackle alcohol and other forms of additives. e) Tax Stamps in India & their role in curbing illicit trade, consumer protection, and revenue enhancement, recent developments and key learnings: TAX Stamps have always been an important authentication solution used by Government authorities to curb the illicit trade, protect the consumer and to increase the excise revenue. Today across the globe, 81 countries are using cigarette and alcohol tax stamps. In India, 22 States (including Union Territories) are using approximately 22 billion tax stamps per annum. The success of tax stamps in India comes from their dual role in supply chain monitoring and visual authentication, for both enforcement authorities and consumers. However, this dual role needs to be supported by the appropriate organization and regulation of the Indian liquor trade. If we do not integrate both digital and non-digital (physical and sensory) authentication methods into our approach, then we risk wasting the major investments that are about to be made in track and trace. Of course, there are no completely foolproof processes or systems. There, are, however, complexities within these processes and systems that can deter both professional and not-so-professional counterfeiters. There are always two primary objectives involved: one is to provide, safe, genuine products while protecting the revenue stream of the government, and second, of course, is to be able to catch offenders. Conclusion: Tax Stamps beyond tax collection tools: Policymakers need to study the importance of Tax Stamps in the global context and apply such solutions in all states in India. In India, the Excise Department needs to think about TAX Stamps as a tool beyond tax collection tools. The existence of cheaper, less- sophisticated, less effective stamps and marks potentially dilute the value proposition around their use as platforms to implement the global guidelines. Instead of using it is a mere product, they need to reframe their work on their Tax Stamp Program as an opportunity for consumer & industry empowerment. The new generation Tax Stamps with technological innovation in security printing, serialized coding, data processing, and mobile communications, can be into sophisticated devices with additional roles that related to product authentication, supply chain security & data intelligence. This will ensure and help the State Excise Department in building their policy towards reducing consumption and optimization of revenue. Leading Story
  7. 7. 7 The Authentication Times | Issue 37 a) Tax revenue includes revenue from State own tax revenue plus share in central taxes b) State’s own tax revenue includes revenue from taxes on income, property & capital and taxes on commodity and services Source: Reserve Bank of India study on State Finance Budget for period 2019-20 State Table 1: Budget estimates of States and Union Territories for period 2019-207 a) Tax revenue (Rs Million) b) State own tax revenue (Rs Million) c) State excise revenue (Rs Million) d) percentage of excise revenue in state own tax revenue Andhra Pradesh 1102711 754377 85180 11 Arunachal Pradesh 130111 14400 20,83 14 Assam 523683 179941 14500 8 Bihar 1229217 361746 0 Chhattisgarh 508470 236929 50000 21 Goa 90931 58456 4752 8 Gujarat 1178092 917615 1336 0 Haryana 623216 512660 70000 14 Himachal Pradesh 153194 79214 16253 21 Jammu & Kashmir 249773 103872 14000 13 Jharkhand 498500 237500 16000 7 Karnataka 1415502 1017439 209500 21 Kerala 885822 670999 29837 4 Madhya Pradesh 1290245 652737 130000 20 Maharashtra 2574549 2108242 174773 8 Manipur 63957 11845 87 1 Meghalaya 75121 20898 2898 14 Mizoram 44588 5736 50 1 Nagaland 49726 7801 51 1 Orissa 722065 329999 45000 14 Punjab 509936 376741 62010 16 Rajasthan 1182044 737425 105000 14 Sikkim 39547 9852 2370 24 Tamilnadu 1587915 1248130 72623 6 Telangana 890471 693285 109010 16 Tripura 87049 27489 2310 8 Uttrakhand 236221 147368 30475 21 Uttar Pradesh 2930391 1442491 315174 22 West Bengal 1279424 672072 118736 18 Delhi NCR (UT) 425000 425000 60000 14 Puducherry (UT) 30980 30980 11000 36 Leading Story
  8. 8. 8 The Authentication Times | Issue37 Uganda takes a stand for effective alcohol regulation In a long-overdue move, Ugandan authorities have approved the National Alcohol Control Policy in a bid to curb alcohol abuse nationwide. With Ugandans among the highest consumers of alcohol in Africa— more than one-fifth of the population engages in binge drinking—and the alcohol industry pushing back against effective regulation at every turn, such a public health crackdown by Kampala will be no small undertaking. Untilnow,Uganda hashad no written alcohol policy and still has scarce regulation of alcohol availability and advertising. Kampala’s newly minted Alcohol Control policy addresses several key issues: intoxication, public safety, health impacts, the availability of alcohol, digital tax stamp, and research into alcohol abuse. “The policy was approved with the main objective of raising community awareness about the degree and determinants of the health, social, and economic problems associated with harmful use of alcohol,” remarked Suubi Kiwanuka, an official at the Uganda Medical Centre in Kampala. Dangerous sachets on the way out - Recent efforts have targeted the sale of alcohol in individual sachets, including small plastic packets of spirits as potent as 45% proof. Often costing as little as 13 US cents, the sachets are favored by low-income earners— and schoolchildren. “Because this alcohol is affordable, people carry it in their bags, their geometry sets, in their pockets,” explained Amelia Kyambadde, Uganda’s Minister of Trade and Co- operatives. “Its consumption rate has been very high.” The health risks posed by these pocket-sized sachets are substantial. Multiple studies have found that spirit sachets consistently contain more than just alcohol; carcinogens such as ethanol, arsenic, chromium, and lead are often part of the package. With close to one-third of Ugandans beginning to consume alcohol before their 14th birthday, ridding the market of these sachets is a critical first step in Kampala’s efforts to ensure a healthier population. Cracking down on illicit tipples – Digital Tax Stamps A multi-sectoral task force launched by Kyambadde will be enforcing the ban, including officials from the ministries of health, internal affairs, finance, trade, education, and local government. Also involved in the Uganda Revenue Authority (URA), which is currently deploying its own campaign to combat the sale of illicit and contraband beverages.Parallel to Uganda’s newly-codified national alcohol policy and the ban on alcohol sachets is the installation of a new system that has proven highly successful in neighboring Kenya: the introduction of digital tax stamps, allowing consumers and retailers alike to verify that certain products are genuine—and that tax has been paid on them. The tax stamp system targets both heavily regulated products, such as beer, spirits, wines, and tobacco, as well as common consumer goods like mineral water and soda. In addition to protecting consumers from fake products and curbing tax evasion from under-the-table sales, the URA says the new digital system will also improve the import process. In Kenya, the same system has reduced the number of days for clearing customs from 28 days to four.Uganda’s similar tax stamp system is going to start this week. Backlash from covert interests - Despite opposition from manufacturers and distributors worried about their bottom lines, Uganda’s Revenue Authority is, fortunately, determined to push ahead regardless. It has good reason to be optimistic: through their own initiative, the Kenyan Revenue Authority was able to seize more than 350,000 illicit cigarettes packs, secured a 100 percent prosecutorial success rate in over 400 cases, and increase excise revenue collections by more than half. Higher compliance with taxes on consumer goods, then, is likely to dissuade the abuse of harmful substances through higher price tags while removing illicit goods from the market. At the same time, plugging national tax leaks will pad Kampala’s coffers, a sure windfall for future public health initiatives. It’s a sign that Uganda is on track to reap both financial and community benefits from these new controls. Source: https://eastafricamonitor.com Country Initiative
  9. 9. 9 The Authentication Times | Issue 37 UAE’s FTA to begin second phase of tobacco markings UAE’s Federal Tax Authority (FTA) intends to begin the second leg of its ‘Marking Tobacco and Tobacco Products Scheme’ from 1st November. The import of water pipe tobacco and electrically heated cigarette plugs that do not have digital tax stamps will be banned from March next year, a statement said. The first phase of the scheme, which started in August this year, banned all type of cigarettes in local markets that didn’t bear the digital tax stamps. The initiative is primarily to protect customers from low quality products and fraud, as well as to curb tax evasion. “Starting November 1, 2019, all producers and importers of all kinds of water pipe tobacco, and electronically heated cigarette plugs can place their orders for Digital Tax Stamps from the system’s supplier after FTA approval and then placing them on the packaging of their products before they are supplied on the market and ensure excise tax has been paid in all UAE,” said H.E. Khalid Ali Al Bustani, FTA director general. The entire value chain (manufacturer to consumer) of all marked and approved products is electronically monitored to ensure all excise taxes due on tobacco and related products are paid, the statement said. Manufacturers and suppliers can download the application form from the FTA website to order digital tax stamps. “Starting from March 1, 2020, importing any type of water pipe tobacco and electronically heated cigarette plugs into the UAE without the Digital Tax Stamps will be strictly prohibited,” H.E. said. “Following that, another ban will come into effect on June 1, 2020, this time affecting any supply, transfer, stockpiling, or circulating of unmarked waterpipe tobacco and electronically heated cigarette plugs in UAE markets.” Source: https://gulfbusiness.com/ News The Kenya Revenue Authority (KRA) announced the deadline of November 13 to enforce excise stamps be affixed on bottled water, juices, soda and other non-alcoholic beverages as well as cosmetics, failure to which goods will be seized and offenders prosecuted. The roll-out of the Excisable Goods Management System (EGMS) was initially set for September 1 but was delayed after consultation with manufacturers. The new system will see manufacturers required to install blowers that dry bottle caps before they are coded. In addition, they will build server rooms, lay fibre optic cables and install a software that would then make them compliant. “KRA informs all licensed manufacturers, importers, distributors, retailers and general public that further to the Public notice dated 30 August 2019 bottled water, juices, energy drinks, soda and other non-alcoholic beverages manufactured in or imported into Kenya from 13 November, 2019 must be affixed with an Excise Stamp,” said KRA Commissioner- General James Githii Mburu in a notice. “All bottled water, juices, energy drinks, soda and other non-alcoholic beverages manufactured or imported into Kenya before the go live date will be allowed in the market without stamps until January31, 2020,” he said. The authority is looking to raise an additional Sh3.6 billion from excise tax. Kenya Revenue Authority (KRA) enforce the stamps to raise an additional Sh3.6 billion from excise tax. Nanotech Security Corp. announces the launch of its KolourDepth™ banknote security feature. The depicted private note features a new currency authentication product called KolourDepth that involves 3D, color, and movement. In addition to striking overt security effects like multiple 3D elements, multiple color images, Omni-directional movement, and overprinting, KolourDepth can enhance a feature by also adding microtext, nanotext, nano-imagery, and machine readability. KolourDepth is based on Nanotech KolourOptik® nanographic display platform which is the foundational technology behind all our leading-edge nanotechnology products. Nanotech launch new security feature KolourDepth™
  10. 10. 10 The Authentication Times | Issue37News Tea Board has floated EOI to bid for leveraging blockchain in tea’s supply chain It expects the technology to capture the entire supply chain for tea In India, tea is usually adulterated by mixing colored powder to it. The Tea Board India is planning to use blockchain to implement the complete traceability of tea produced and supplied in the country. The board wants to track the tea production starting from the plantation stage to the time a buyer buys it. The Tea Board believes that blockchain will help identify and eliminate points of adulteration of tea, preserving the identity of Indian tea, and helping tea farmers get a fair price of the products. The board also believes it could increase the consumption of tea in the domestic market. While releasing a tender, the Tea Board has put forward an expression of interest (EOI) inviting companies to bid for designing, developing and commissioning end-to-end technology to ensure traceability of the entire value chain of the tea trade. Reportedly, the company or startup selected through the bidding process is expected to study and implement available technologies such as blockchain to integrate various online systems for ensuring the traceability of the tea. Daimler India cracks down on unauthorized use of its BharatBenz brand name BharatBenz, commercial vehicle brand of Daimler AG, has cracked down on unauthorized use of its brand name and spare parts. Daimler India Commercial Vehicles, which owns the brand BharatBenz, said that it prosecuted Pyken Industries for manufacturing and selling spare parts bearing the mark BHARATBENZ and operating an unauthorized domain under the BharatBenz brand name, thereby damaging the brand’s reputation. The Delhi High Court passed an ex parte interim order against Pyken Industries, allowing a raid to be conducted by the court-appointed commissioner at two locations -- Pyken Industries Pvt Ltd Ghaziabad and BSI Sales India, Delhi. Several products were seized including Torque rod bushes, V rod bushes, King Pin Bearings and Oil Seals to name a few, said the company. Without disclosing the value, Satyakam Arya, Managing Director, and CEO, DICV, said, “It is not just about monetary damages, which may be negligible or substantial. It is about fighting back for the customer. It is about creating awareness and ensuring safety. We take brand protection seriously and this legal action shows how vigorously we will always work to protect our customers and our brand reputation.” The use of non-genuine parts damages a brand’s reputation since it potentially impacts the efficiency of the vehicle and compromises the safety of the driver, goods, passengers, and bystanders. In June this year, BharatBenz opened its first genuine parts outlet in Coimbatore and has plans to extend this to other parts of the country.
  11. 11. 11 The Authentication Times | Issue 37 Global supply chain standards enabling Delhi Excise curb counterfeit in liquor As per industry estimates, India consumes around 91 million cases of alcohol (IMFL), with a growth rate of around 8%, in each quarter. In India, the sector is swamped by various social and regulatory hurdles. Mostly, it is trade controlled by the State Government, where the paramount importance is given to consumer safety. However, accurate & reliable information on liquor brand/products is inaccessible to the consumers due to regulatory concerns. In this endeavor, it becomes imperative to control the counterfeit product, as soon as it enters anywhere in the supply chain, starting from manufacturer to the end-consumer. To facilitate the information exchange, The Delhi State Excise Department developed an app that enables spot check by scanning the barcodes. The mLiquor app allows tracking the status of each liquor bottle using its barcode and reporting illegal liquor to the control room which has ensured that sufficient data is present in the public domain for decision making, trends, take corrective actions. The app also helps in the Monitoring of stocksthroughthedigitalrepository it powers as well as to establish a First in First out inventory valuation method, which has been considered the most effective inventory valuation method, theoretically. Distillers and manufacturers identify bottles and cases with unique product identification codes (GTINs based on GS1 Standards). The two-dimensional GS1 Data Matrix barcodes encoded with the product GTIN and Serial Number are applied on the bottles and mono cartons. And the one- dimensional GS1-128 barcodes are on the cases/shipper with GTIN, date of manufacturing, best before date and batch number. The solution not only helps in the unique identification of the liquor bottles in the supply chain from the bonded warehouses to the retail outlet but they also help with the automation of daily sales, tracking of the liquor bottles, and inventory reporting. This helps authorities to know exactly how many bottles/cases are at which location at any given time. Citizens of Delhi benefit too. Consumers can use a mobile app (mLiquorSaleCheck) to Check the genuineness of the purchased liquor bottle using their mobile phones. When the barcode pasted on the liquor bottle cap is scanned the app provides information about the product such as brand name, quantity, price and the shop name from where it has been purchased. Consumers can also submit grievances using this app in case the liquor was purchased at another source from the one mentioned preventing the entry of unauthorized goods in the supply chain. Source: GS1 India News
  12. 12. 12 The Authentication Times | Issue37
  13. 13. 13 The Authentication Times | Issue 37
  14. 14. 14 The Authentication Times | Issue37 What is the impact of the spurious liquor industry for the government, people and the IMFL industry? Illicit trade in alcohol undermines sustainable economic growth. Collectively, it affects all the stakeholders in society in various terms. While the industry and Government lose revenue, it is the consumer who is impacted the most as illicit trade in liquor poses a serious threat to consumer health. Poor quality or spurious liquor can cause death and serious illness, as seen in connection with several incidents of hooch tragedy in India. According to various media reports, more than 250 persons died in India due to hooch tragedies in the year 2019. Excise duty which is an important source of revenue is continually under threat from the practice of illicit trade. Considerable amount of money which could be used to benefit the government services of a country are being diverted to the pockets of criminals participating in illegal trading. However, more than the loss of tax revenue it could cost Government loss of image/goodwill. The hooch tragedies occur due to illicit liquor consumption eroded the image of state governments which createsa challenge for the state government to ensure consumer confidence. How can the government streamline the industry to benefit the poorer section of society to get affordable liquor at a price which will deter rampant drinking and the alcobev industry should not be labeled as a sin industry? There is a direct link between prices and consumption. Post hooch tragedy in Uttar Pradesh, the Department set up a committee, which found that poorer sections are using smuggled liquor, as it was available at almost half of the price of Government Country Liquor bottles. This will continue to be an area where careful thought is needed in order to preserve a balance. What are the challenges of fighting the illicit liquor trade? How can the FSSAI regulate the quality of liquor sold? Illicit alcohol is prevalent in both developed and developing countries, with no country immune to this threat. For example, the UK government lost £1.3 billion in excise tax revenue in the period 2015-16, and Dutch authorities estimate the annual revenue losses from illicit trade in alcohol at €100 million. Liquor bootlegging in New York City alone is estimated to have cost the city US$1 billion in lost taxes over the past 15 years. The illicit alcohol products are sold as either counterfeit of genuine brands or are unlabelled. (Source: TRACEIT. ORG) When producing counterfeits, the forgery goes beyond the product’s label, often including bottle designs and caps. In India, State Excise Department faces various challenges such as a) How to combat smuggling and illicit liquor b) How to ensure foolproof labeling and supply chain? How to ensure consumer confidence c) How to increase excise revenue and the most important the problem of identification/authentication - How to differentiate fake liquor bottles from genuine? The Food Safety and Standards Authority of India (FSSAI) had last year issued a regulation on alcoholic beverages and the same became effective from April 1. As per this regulation, all liquor bottles need to carry a statutory warning that “consumption of alcohol is injurious to health. Be safe-don’t drink and drive”. So far, it was primarily regulated by excise commissioners India needs a comprehensive national policy to tackle alcohol and other forms of additives. Mr. Nakul Pasricha President, Authentication Solution Providers’ Association (ASPA) gives insights on the cons of the spurious liquor industry. FACE TO FACE
  15. 15. 15 The Authentication Times | Issue 37 and they were only looking at alcoholic content and the toxic substances in alcohol. Now, there are far more elaborate standards that are benchmarked with the global standards and in certain cases, they have taken the Indian context also into consideration. In addition to excise commissioners, the food safety commissioners would also look into the enforcement of these standards What role can the excise department play to boost revenue to ensure a win-win situation for the government, the consumer and the industry? Excise Departments faces various challenge. The key from these are Revenue enhancement & protection, as well as to ensure a person get genuine products. Anti- Counterfeiting solutions like TAX Stamps (Excise Adhesive Label) plays an important role. We believe that State Excise Departments need to study the importance of Tax Stamps in the global context and apply such solutions in India. In India, the Excise Department needs to think about TAX Stamps as a tool beyond tax collection tools. The existence of cheaper, less-sophisticated, less effective stamps and marks potentially dilute the value proposition around their use as platforms to implement the global guidelines. Instead of using it is a mere product, they need to reframe their work on their Tax Stamp Program as an opportunity for consumer & industry empowerment. The new generation Tax Stamps with technological innovation in security printing, serialized coding, data processing, and mobile communications, can be into sophisticated devices with additional roles that related to product authentication, supply chain security & data intelligence. This will ensure and help the State Excise Department in building its policy towards reducing consumption and more revenue. Will a rationing system deter excessive drinking? We think this differsfrom case to case basis and lots depend on State Excise Policy. About half a century ago, broad restrictions on who could purchase alcoholic beverages were fairly common. The most extensive of such systems was the Bratt rationing scheme in Sweden in force until 1955, which assigned a quantitatively defined upper limit for spirits purchases per person with different ratios for males and females and for younger age groups. Studies have shown that rationing systems in Greenland, Poland and Sweden reduced alcohol-related harm (Anderson & Baumberg, 2006). In Spitzbergen (Norway) there still exists a rationing system for purchases of alcoholic beverages. However, this research is conducting a long time back and needs to be done in the current geographical scenario. Source: http://www. euro.who.int/__data/assets/pdf_file/0011/191369/9- Availability-of-alcohol.pdf?ua=1 Can cheap liquor manufacturing companies create a fund to help families affected by alcoholics? Yes, it can be done in partnership with the State Excise Department and various NGOs. But, before that,there is a need for creating & raising awareness at the mass level. There is a need to take preventive as well as long term strategic goals. As preventive steps, there is a need for building eco-systems where consumers get a genuine and authentic product and must be involved in the authentication process. In longer-term strategy, a lot of work needs to be done towards liquor standardization, monitoring of ethynyl alcohol, etc. etc. Even today, in our Hospitals, are not well trained for treatment for people suffering from hooch incidents. Post the hooch tragedy in Uttar Pradesh, the Government committed to finding that there is a lack of guidelines in Hospitals for treatment of patients consuming spurious liquor. Is banning illicit liquor the way forward? Prohibition is not the only answer. Many times, prohibition leads to increased illicit liquor business. For example, Liquor is prohibited in Gujarat, however, according to a recent study 38% of youth in Gujarat consumer alcohol. Other than this, 12% of people are consuming other forms of drugs such as cannabis. In the last two years, police had seized liquor valued Rs 254 crore. The Government had confirmed that due to prohibition there is an increase in smuggling from a neighboring state. In the last two years,the total case reported132415countryliquor,29989IMFLliquor.Now the state government is demanding compensation cost from central as they are losing Rs 15000 crore annually due to prohibition. Similarly, in other prohibited states Bihar, the sale of other drugs products has increased significantly. As per the latest report from the Narcotics Control Bureau, Bihar top the chart in consumption of opium and hashish. In our country, 16 crore people consume alcohol whilst 3.1 crore people use cannabis. India needs a comprehensive national policy to tackle alcohol and other forms of additives. The interview was first published at Ambrosia Magazine. FACE TO FACE
  16. 16. 16 The Authentication Times | Issue37 Interview with Sean Worthington, Raidatech You launched RAIDATECH in 2018, what is it, how does it work and how it is going to help the organisation in the fight against counterfeiting? The biggest problem with anti-counterfeiting is that no one wants to pay for it and it does not provide much value after it works. In our system, anti-counterfeiting is just a side effect that brands get for free. What we provide is customer engagement. We actually write money on the packaging and this money can potentially be used anywhere in the world. It is a strong incentive for customers to engage with the brand. Like the H&S Green Stamps of the past, consumers get rewarded. But unlike those stamp programs, we can bring customers to a brand’s website and social media to help the brand go viral. Most importantly, we can provide data points that allow brands to know if their marketing is working or not. It works by creating a RAIDA (Redundant Array of Independent Detection Agents). The RAIDA consists of 25 Clouds each located in a different jurisdiction all over the world which are controlled by independent operators. We authenticate items by contacting all the Clouds in parallel. Because of the speed of light, this process only takes a few seconds. Each item will have 25 authenticity numbers that correspond to each RAIDA. If I have the item, I know the codes. Whoever knows the codes is the owner. If you want to buy something, you willgive the seller your codes. Anyone who knows the codes can change the codes. When they change them, they are the new owner. We call this “Powning” or password owning. You mentioned that most digital authentication technologies rely on an online / cloud-based database or blockchain to reconcile data. How is RAIDTECH different from others? Why it cannot be hacked? RAIDATech has invented a new authentication protocol that allows for “Data Supremacy”. Data Supremacy is when a database does not have an owner and cannot be shut down by governments, hackers or even the creators. There are only two other systems like this:The Blockchain and the DNS (Domain Name System). Our system is based on the DNS. The DNS system has never gone down since the day it was created in 1985 and serves billions of requests every day from every internet user in the world. RAIDA, like the DNS, it is very fast, can handle the entire world traffic and is very energy efficient. It blows the Blockchain away! The way that Data Supremecy is achieved in the RAIDA is by eliminating any system risk that could bring down the system. It is assumed that hackers will hack an RAIDA but the data they get will be of no use because there are 24 others that they did not hack. Individual components are vulnerable but the system as a whole can take massive damage and keep working. What is your business model & how is the response of Brand owners towards your solutions? We have received very good responses from billion- dollar Brand owners. Since we started last year, we were able to raise money faster than Facebook did when it started and we have been quick to make a lot of revenues. Our model has been to partner with packaging companies. They know their customers. We are happy to be the nerds in the back room that makes sure the technology is working. As a computer scientist, the marketing and sales stresses me out. Finally, where do you see RAIDATECH in the next five years? I think we are going to be a “must-have” add-on if Brands want to compete in the future. Brands need to know is that customers are getting richer and they are moving up on Maslow’s hierarchy of needs. Products that want to stay high-end need to provide more than just functionality. Bands need to ask themselves, how can my product help my customers to achieve belonging and love? What about prestige and accomplishment? How about helping people to engage in creative activities and reach their full potential? RAIDATech has the answer and we will throw in an anti-counterfeiting system for free! FACE TO FACE
  17. 17. 17 The Authentication Times | Issue 37 Innovation Innovation in Authentication Introduction The early cave paintings and Chinese magic mirror attest the fact that man has always been very fascinated about creating image and using interference of light. Holography was born at the time of Indian independence, but became a real technological possibility when laser was invented in 1960. The technologyhas been visualized many invisible avenues and seems to have advanced rapidly in recent times, as a consequence, holograms have started appearing everywhere: on credit cards, magazine covers, advertisements and medical images, to cite a few. Intellectual Property Intellectual property protection in holography has been an integral part of business since Dr. Gabor’s invention of the theory of holography in 1947.The beginning of 1970s when the first holographic material patents have appeared and in the course of the last 50 years thousands of patents have been filed which are creating valuable assets for their owners. Besides protecting their owner’s products, these patents are valuable possessions that can be licensed, sold, leased, and used as collateral for business financing. Innovation in Authentication Authentication is a very old method. As time passed, people started offering authentication services and also started protecting rights in their inventions in authentication field. We have patents in authentication related innovations since late 80s. This is an area which requires constant innovation because if security features become old, they can be easily used by counterfeit manufacturers too. So, there is high demand of bringing new invention in this field of authentication. Since last 5 years the patent databases are full of patent applications with multi featured authentication features from optical security to track and trace system. Patents Trends in Authentication Certain broad key terms related to authentication technology were executed by Patentwire on database [questel orbit, 19-06-2019] and following trends were observed in output patents/applications in the domain of authentication. Patent trend in Authentication Technologies worldwide): The technologies which are prevalent in the field of authentication are - EAS Tags and System, Tamper Evident Label, Tamper Evident Closure, Taggant, Substrate Security Paper, Currency Authentication, SecurityPrint,SecurityInk,Trackand Trace System and Optical Security. According to our observation, “Optical security” and “Track and trace system” are the most used technology in patent publications authentication innovation domain. Optical security is leading technology in authentication due to highly useful holography techniques. Hologram technology offers three levels of security – covert, overt and forensic hence it is the security
  18. 18. 18 The Authentication Times | Issue37 features of choice for securing the critical personal data in a passport or on an ID card against tampering, alteration, forgery or counterfeiting. Patent trend in Authentication Technologies (India) The search was conducted using same parameters as used worldwide, but only India was opted as the Publication jurisdiction. According to our observation, here also “Optical security” and “Track and trace system” are the most used technologies in patent publications in authentication innovation domain. ASPA members, contribution in innovation in authentication: De La Rue and SICPA are having abundant patent in their accounts. But the total patent applications filed so far from other ASPA members cumulatively, is below 200. [Questel Orbit; 08-07-2019; 151 total results, when All ASPA members were kept as assignees (excluding De La Rue and SICPA)]. However when these 151 patents were analysed for their technology, only 31 patents were filed in the field of authentication. In ASPA members, De La Rue has more than 750 patents; SICPA has more than 500 patents, and then comes Manipal technologies with 12 patents in authentication followed by Pharmasecure with 7 patents in authentication. Jurisdiction Trend: China is leading jurisdiction in filing patents for authentication related technologies, followed by United States and Japan. Recent Trend: More than 50% of the patents have been published in last 5 years. However the technology trend remains the same as Track and trace and optical security technologies are leading in the recent innovation trend too followed by security inks. This indicates increased interests in authentication related innovations in recent years. Increased counterfeiting due to increased online shopping sites has also made the innovators to find new ways to deal with counterfeit products and hence resulted in abrupt innovations in authentication field in last few years. Key highlights of IP landscape on Authentication: • Optical security and Track and trace system are the most used technology in patent publications authentication innovation domain. • De La Rue, SICPA and Dai Nippon Printing are the top assignees. • China is leading jurisdiction in filing patents for authentication related technologies, followed by United States and Japan. • More than half of the publications in authentication came in last 5 years. Conclusion: Holography by its nature tells an amazing story of its development and its integration of modern science and technology. Through its development journey, the technology created new communities and flourished with them. Its progression from Cinematography to Authentication has been distinctly different from what their creators might haveexpected. Through its fascinating journey, the technologies of holography imbibed withmodern sciences, emerged with more realistically applications, and perspiredtheir future trajectories. Innovation Lalit Ambastha is founder of Patentwire, an Independent Patent & Technology Consulting Firm. He is Patent Attorney in India and is specializing in the area of Intellectual Property. He can be reached at lalit.ambastha@patentwire.co.in Innovation
  19. 19. 19 The Authentication Times | Issue 37 ASPA & Member News ASPA gear up to fight fakes - Signs agreement with CSIR, reform organization structure and organizing 3rd Authentication Forum Authentication Solution Providers’ Association (ASPA) and CSIR – NIIST (National Institute for Interdisciplinary Science and Technology, Ministry of Science and Technology, Government of India) have signed an MoU for knowledge sharing, research, and development of new generation physical and digital authentication solutions. The decision was taken in the recently concluded annual general meeting (AGM) of ASPA where the association also announced its new governing body. Nakul Pasricha, CEO, and president, PharmaSecure has been elected as the new president of ASPA, in recognition of his ongoing efforts to promote the digital authentication industry in India. Pasricha, said, ‘ASPA has decided to focus on research and advancement and innovation, upgrading their current technologies, systems, and processes to cope up with the global markets. The Association has been a driving force in bringing awareness around the benefits of authentication tools in stakeholders - government, decision-makers, business leaders and customers. Arun Agarwal, chief executive officer of Kantas Track Pack India, will hold the position of vice president. Luv D. Shriram will be the general secretary and treasurer, U K Gupta is ex-officio and Nityanand Shenoy and Dinesh Jain are co-opted, members. Sanjay Kumbhat and Ashish Chandra are also members of the governing body. To strengthen the authentication solution ecosystem in the country, the Association has also concentrated its energy on formation of regional chapters and committees and apart from Governing Body, three new regional chapters were formed (Eastern, Western and Southern) to initiate awareness programs, achieving the vision and mission of the Association. The new regional chapter head will be for period 2018-20 are Mr. Dinesh Jain, Holosecurity representing South, Mr. Manoj Kochar, Holoflex representing East and Mr. Nityanand Shenoy, President & MD, PRS Permacel as West. This will help the association to reach close to indigenous Indian brands and more importantly the consumers. Apart from these, the association is also organizing The Authentication Forum 2019, 3rd leadership summit on anti-counterfeiting and brand protection will be held on 7-8 November 2019 at Hotel Lalit, New Delhi. According to ASPA, Vice- President, Arun Agarwal, “ASPA is looking to expand knowledge and availability of promising anti-counterfeiting technologies including blockchain, artificial intelligence, NFC, RFID, traceability and other covert and overt physical authentication features and speeding up its ongoing campaigns like Make Sure India and brand protection awareness initiatives across India”. Photo caption: ASPA members at its Annual General Meeting 2019 held in Pune, India
  20. 20. 20 The Authentication Times | Issue37 ASPA provides overview on Tax Stamps in India at Tax Stamp Forum 2019 ASPA organize seminar at ProPak India 2019 ASPA Secretary, Chander S Jeena represented the association at recently held Tax Stamp Forum at Budapest, Hungary. The 2019 event was attended by just under 240 attendees from 50 countries and 116 different organizations. In addition, around 25 government organizations from across the world were in attendance, mainly consisting of tax revenue authorities. These included authorities from Guyana, Chile, Israel, Poland, Rwanda, Kenya, Uganda, Georgia, European Commission, Pakistan, Bangladesh, Sri Lanka, Mauritius, Botswana, India, Thailand, Italy, Spain, Ireland, Taiwan, Moldova, Lesotho, Romania and of course the host nation, Hungary.ASPA Secretariat presented a paper on “Overview of Tax Stamps in India – Key Learnings and Developments”. It is to be noted that India has a good potential market for Tax Stamps in India for Liquor and Tobacco products. He emphasis on need of approach towards Tax Stamps beyond tax collection tools need of combination of technologies, and selection of ethical vendor for successful Tax Stamp program. ASPA in association with Informa organized a seminar on Anti- Counterfeiting Trends and Developments in Packaging on 23rd October at ProPak India. The 2nd edition of ProPak India was held on 22-24 October 2019 at Bombay Exhibition Centre, Mumbai. Over 100 exhibitors including from Germany, Italy, China, Singapore and other countries present their latest technology and innovation of machinery, materials, process control and testing, and automation for the processing and packaging market. The event got support from key trade bodies including the All India Food Processors’ Association (AIFPA), Flexible Packaging and Folding Carton Manufacturers Association of India (IFCA), Association of Food Scientists and Technologists (India)-Mumbai Chapter, Indian Authentication Solution Providers’ Association (ASPA), and SIES School of Packaging. During the Seminar, Mr. Mahendroo share his view on integration of physical authentication technologies such as security hologram with traceability, whilst, Mr. Gaurav Sathaye from United Ink shared detailed view on latest developments in security inks. Mr. Anshul speaks about creative strategies adopted by Brand to protect themselves from counterfeiting efforts. A solution which can help consumer verify the product as genuine, which eliminates counterfeiting from supply chain is a win-win for everyone. The event was well attended by Brand owners, consultants and packaging professionals. Picture: Left to right, Chander S Jeena, Secretary, ASPA, Gaurav Sathaye, CEO, United Specialty Ink, Anshul Gupta, Country Head, Sproxil and Dewakar Mahendroo, AVP – Business Solutions, Holostik India ASPA & Member News
  21. 21. 21 The Authentication Times | Issue 37 ASPA & Member News ASPA was pleased to be associated with the 2019 edition of Smart Card Expo held on 25-27 September at the Greater Noida Expo, India. ASPA President inaugurated the show alongwith other dignitaries and exhibited at the show. The 2019 editions of electronica India and productronica India hosted more than 650 exhibitors from over 18 countries making them the biggest trade shows for electronic components and machinery in India. De La Rue reforming appoints new CEO Kezzler announces further strengthening of its Asian operations De La Rue plc has announced the appointment of Clive Vacher as Chief Executive Officer and an Executive Director with effect from 7 October 2019. Clive Vacher joined De La Rue on as the replacement for Martin Sutherland who announced his departure in May. De La Rue said, “Mr.Vacher had significant experience of business transformation from 16 years in senior positions at industrial companies, including jet engine manufacturer Pratt & Whitney and Rolls-Royce. He was most recently chief executive of Canadian semiconductor and transistor manufacturer Dynex Power”. De La Rue also reaffirms that it will continue with the proposed reorganization of the business into two Divisions, to enhance strategic focus and generate greater efficiencies. The Group’s operating model is being realigned to focus on two businesses, Currency and Authentication, each requiring distinct products and solutions, and pursuing different strategic and operational priorities.The new Divisions will be led by Ruth Euling, Managing Director, Currency (previously Global Sales Director for Currency), and Andrew Clint, Managing Director, Authentication (previously Global Business Development Director PA&T). Kezzler announced that they are set to strengthen their Asian operations by expanding in Singapore with the appointment of Pengfei Zhang as Director of Pre-sales and Delivery. The appointment follows an increasing demand for serialization and traceability business and consumer engagement services in Asia. Prior to Pengfei Zhang´s appointment in Singapore, he was a Senior Engineering Architect at Kezzler’s Headquarters in Oslo since July 2018. He joined Kezzler after 11 years with Schlumberger, where he was a Senior Software Engineer and Architect, based out of their Beijing R&D Center and Oslo Technology Centre. The Singapore office is one of two service points Kezzler now has in the region, after the company proudly announced the opening of their first Chinese office in Beijing, back in July 2019. In addition to Singapore and China, Kezzler’s global network of offices also includes Norway, India, the USA, and the Netherlands. ASPA at Smart Card Expo 2019
  22. 22. 22 The Authentication Times | Issue37Cannabis News Center to Allow Scientific Research on Cannabis Monitored growth of cannabis will be allowed at the Central Institute of Medicinal and Aromatic Plants in Uttar Pradesh and Uttarakhand The Indian government will allow cannabis research for the first time, with the narcotics department sanctioning a research and development project to examine substances found in the plant. The Vedas speak about cannabis as a sacred plant, but it was banned due to drug abuse. Apart from prohibiting cultivation, sale, and possession of the drug, India had also decided not to tap into its potential medical benefits. Now, the narcotics department within the Union finance ministry has sanctioned a research and development project on compounds such as cannabidiol (CBD) and tetrahydrocannabinol (THC) found in cannabis, commonly known as ganja. While the former is used in gels, oils and has medicinal use, the latter is responsible for the psychoactive effect. Earlier this year, the World Health Organisation proposed recategorizing cannabis in international law due to growing evidence supporting its medical use. A number of countries have also moved to legalize the sale of the drug for medicinal purposes. The narcotics department’s sanction means that cannabis will be grown in a monitored way, at the Central Institute of Medicinal and Aromatic Plants (CIMAP) in Uttar Pradesh and Uttarakhand. India doesn’t allow the cultivation of cannabis. Cannabis, coca, and opium are prohibited for any general cultivation, consumption or possession under the Narcotic Drugs and Psychotropic Substances Act, 1985. The Act allows cannabis to be used only for medical and scientific purposes. According to a note released by the government, the plan is for the Council of Scientific and Industrial Research (CSIR) and CIMAP to work on the “genetic improvement of identification and selection of THC, CBD, and cannabinioderpene.” This note has been sent to all state governments as well as the director of narcotics control in the finance ministry. High levels of THC is responsible for the psychoactive nature of cannabis. Cannabis with low THC content can be used for industrial and horticulture purposes. It can also be used for biomass and production of cannabis seed oil. CBD extracts can be used in oils and food supplements and also has medicinal use. Last year too, there was talk about medical cannabis being approved in India. When used correctly, it can help to manage pain, cancer, epilepsy and sickle cell anemia. The Indian Institute of Integrative Medicine (IIIM) in Jammu is reportedly working alongside CSIR on this research. The institute plans to conduct clinical trials along with the Tata Memorial Centre (TMC) in Mumbai, the All India Institute of Medical Sciences and a Raipur- based hospital. Some animal trials were conducted previously, and the institute said last year it hoped to get regulatory approval for human trials. At a recent event organized in partnership with India’s AYUSH ministry, some AYUSH experts pitched for the legal use of medical cannabis, especially in pain management. Currently, some Indian companies have been using hemp, also made from cannabis but without its drug properties, to make textiles and accessories.
  23. 23. 23 The Authentication Times | Issue 37 Cannabis in News ASPA News
  24. 24. 24 The Authentication Times | Issue37Cannabis in News ASPA News D-242, Sector 63, Noida, U ar Pradesh 201 301 Phone: 0120-4289778 E-mail : info@ktpil.com • Website : www.ktpil.com Member of: Our layered security solution helps to combat tax avoidance by preventing tampering and counterfeiting . We are manufacturer of tax stamp to your requirements, as well as providing a range of security solutions with over 30 years experience producing anti- counterfeiting solution. You can rely on the integrity and quality of our products. we are a trusted partner to Government and state Departments as well as many leading brand owners. Tax Stamp Solutions Providing Layered Physical & Digital Security State Governments increasingly rely on tax stamps for revenue collection and are constantly looking for ways to apply increasingly effective controls. • Holographic Wads • Track and Trace • Security Hologram • Holographic Strip • Tax Stamp • Security Labels • Security Certificates • Holographic Scratch Labels • Holographic Shrink Sleeves • Products With Special Features

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