SDG 8: Decent Work and Economic Growth | SDG 16: Peace, Justice and Strong Institutions
Ministry of Commerce and Industry | Ministry of Labour and Employment | Ministry of Home Affairs
A joint report by the OECD and EUIPO titled ‘From Fakes to Forced Labour: Evidence of Correlation Between Illicit Trade in Counterfeits and Labour Exploitation’ establishes a robust empirical link between the trade in counterfeit goods and severe labour exploitation, including forced labour and hazardous child labour. Global illicit trade in fakes is valued at up to USD 467 billion annually, representing roughly 2.3% of global trade.
The analysis demonstrates that criminal networks systematically rely on vulnerable, unprotected workers to minimize production costs, with forced labour serving as a primary predictor of counterfeit-trade intensity. Econometric modeling indicates that a one-percentage-point increase in forced labour prevalence is associated with a 0.0076% increase in the value of counterfeit trade. The report identifies a “poly-criminal” nexus where human trafficking routes and facilitators are shared with counterfeit smuggling operations. Furthermore, countries identified as high-intensity exporters of fakes, as measured by the GTRIC-e index, frequently correlate with weak labour-market conditions and higher incidences of fatal occupational injuries.
Structural Drivers of Illicit Production
Informality and Vulnerability: Counterfeiting thrives in environments with high informal employment and weak governance, where workers are easily replaced and lack legal protection.
Cost-Reduction Strategies: Lower minimum-wage protections and weak labour rights are directly correlated with higher counterfeit activity as traffickers externalize risks through exploitation.
Safety Risks: Countries frequently identified as sources of fakes show a higher incidence of fatal occupational injuries and hazardous working conditions.
Supply Chain Opacity: Criminal counterfeiters operate entirely outside regulatory frameworks, making detection of forced labour significantly more difficult than in legitimate supply chains.
Institutional Gaps: The research suggests that institutional and labour governance factors are better predictors of counterfeiting exposure than a country’s GDP per capita alone.
What is ‘GTRIC-e’ and how does it measure a country’s role in the global trade of fakes? The General Trade Related Index of Counterfeiting (GTRIC-e) is a weighted indicator developed by the OECD to measure the relative likelihood that an economy exports counterfeit goods. It combines the absolute value of counterfeit and pirated exports with their proportional share in a country’s total trade. This dual approach ensures that the index captures both large-scale producers and smaller economies where illicit trade may represent a disproportionately high percentage of economic activity, thereby providing a comprehensive map of provenance and transit hubs in the global illicit economy.
Policy Relevance
The report highlights that trade integrity and labour rights are mutually reinforcing; strengthening one directly diminishes the incentives for the other.
Strategic Impact for India:
Transitioning the Informal Economy: With India’s large informal sector, the report’s findings emphasize that formalizing employment is a prerequisite for dismantling the structural incentives that fuel counterfeit manufacturing.
Integrated Customs Enforcement: The Ministry of Finance (Customs) can leverage labour-risk indicators—such as regional informality or minimum wage violations—to enhance risk-profiling for high-priority export sectors like textiles and electronics.
Global Supply Chain Alignment: As India positions itself as a global manufacturing hub, adopting OECD Due Diligence standards is essential to protect legitimate brands and ensure “clean” trade flows that meet emerging EU and US forced labour regulations.
Convergence of Crimes: The identified link between IP crime and human trafficking requires closer inter-agency coordination between the Central Bureau of Investigation (CBI) and state labour departments to target shared criminal infrastructures.
Follow the full update here: From Fakes to Forced Labour: Evidence of Correlation Between Illicit Trade in Counterfeits and Labour Exploitation