When the Pokemon animation TV series was launched on Cartoon Network in May this year, it was followed by the same fanatical frenzy from children that the series has enjoyed elsewhere in the world.

Every kid is boasting about how many Pokemon trading cards he's got and how many more his parents will let him acquire. Then, of course, there are tazos, pencils, toys and the rest, which he just has to have.

The tragedy of course is that all this is happening without a proper licensing plan in place. Pirated, unofficial Pokemon merchandise is doing the rounds everywhere.

It is in a bid to assess just how to deal with this that company officials from Japan are in India on a whistle-stop tour, specifically in Delhi and Mumbai.

Speaking to Indiantelevision.com, Eros CT Huang, MD of Top-Insight International (the company that negotiates licencing for the product in Asia) confesses that the Pokemon phenomenon has gained momentum on its own. Says Eros, "Although we have no numbers on how much unofficial merchandising business is taking place, without having had to sell it, Pokemon merchandise is a huge hit in India. Our animation series is doing phenomenally well. Its popularity is driving kids to buy toys. Every Indian toy shop sells Pokemon toys. So the potential must be huge, the pirates have already swamped the industry. But the Indian market is a bit of a mystery. Indians haven't taken to Japanese products in a big way. So we are just trying to get some answers here."

For those who came in late (and do not have frenzied children to answer to), the Pokemon story is about Ash Ketchum, a boy who wants to be a Pokemon trainer and master and has to collect more and more Pokemon characters with different powers and qualities.

Although, there are many cases where animation characters have driven merchandise sales, Pokemon's case has been contrary. Globally, their licensing business is valued at almost $ 30 billion. With Pokemon, merchandising and programming are both pushing each other. Globally, sometimes the merchandising revenue goes up to 90 per cent of the licensing revenue but they are like water and fish and cannot be separately evaluated. Sometimes, some characters get good TV ratings but the response to the merchandising does not correspond. On the other hand, if you take the example of Tweety, it has always been very popular in India even before Cartoon network brought it to India.

Says Marvin Fernandes, head of CB Media Ventures, which liases for Top-Insight in India, "The essence of the series itself has driven children to collect more and more toy characters. It is mainly peer pressure that has motivated children. Offline card games are such an activity in itself, they push television viewership. Trading cards, which are the most popular merchandise, are about exchanging cards with friends and classmates. So it's really a question of what cards one has."

Huang has just met up with representatives from Pepsi Foods and their clients in New Delhi and hopes to rollout some Pokemon promotional merchandise by early 2004. Macdonalds and Kentucky Fried Chicken are also some other brands that have partnered with them globally might follow suit in India too. Frito Lays, Joyco bubblegum are some Indian clients.

Fernandes explains that issues like basic licensing structure, royalty or minimum guarantee payments and an acceptable product quality that are difficult to negotiate in India. "The problem is that manufacturers are not aware of licensing processes. There is no understanding of paying up minimum guarantee or even regular royalty payment. There is also no established distribution system. Where promotional licensing is concerned, early 2004 should see some interesting Pokemon merchandise in the market," he says.

Fernandes and Huang are currently waiting for promotion and television licensing to build up momentum before starting on product merchandising in a big way.

On asked whether it was the slight decline in Pokemon popularity in US that has triggered off this sudden interest in the Indian market, Fernandes answers, "I think this is the right time to start in India. Household income levels have risen. People have enough to take care of their day-to-day needs and then spend some on toys for children.

Huang also adds, "I think it's the business cycle of animation characters. Pokemon was launched in 1996. Now the characters have to adapt to a newer generation. We have come out with an AG version of Pokemon which is against a fresher background, new locations and characters with the same premise. Jiraichi, a new character in the seventh in the Pokemon movie series is already a hit. The film will release in US at the start of 2004.

We also have plans to launch in Pakistan and neighbouring countries. In any case, US forms almost 50 per cent of our market, which runs in billions of dollars. I don't think only India can supplement this decline in a big way."