Beijing seeks clarity on imports stuck due to 100% inspection

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NEW DELHI: Beijing has sought clarity from Delhi on imports from China getting stuck as they were being subjected to 100% examination. Domestic industry lobby groups have complained that the resultant supply chain disruption comes at a bad time as companies are reopening after the lockdown.

“The Chinese government has communicated to the Indian side that Chinese companies are facing supply chain issues owing to the recent move,” said a person familiar with the matter.

The development comes amid anti-Chinese sentiment in the wake of border hostilities. India, which is moving to bar Chinese firms from central and state government projects, had already been taking steps to cut dependence on imports from that country as part of a self-reliance drive.

Alarmed at the development, various industry associations such as Ficci, handset lobby ICEA, and MAIT, which represents IT hardware manufacturers, are reaching out to the government, including the finance and commerce ministries. Their contention is that the move to subject shipments from China to 100% manual examination will disrupt supply chains. Expensive components and mission-critical imports from China could be damaged, making things more difficult for the already stressed industry, they say.

Back-channel Talks

Some people with knowledge of the matter said back-channel talks have begun with the aim of preventing the matter from snowballing into a major trade dispute following recent border clashes between the two countries.

Electronics manufacturing industry executives are worried about manual examination, which they say is happening in the absence of written orders. The move will disrupt supplies of items such as high-end smartphones, laptops, watches and tablets, and possibly lead to damaged goods. Buyers may also not be too keen on unsealed packaging, they said.

The India Cellular and Electronics Association (ICEA), which represents smartphone manufacturers such as Apple, Foxconn, Xiaomi, Oppo and Vivo, has written to the secretaries of the revenue and commerce ministries, Department for Promotion of Industry and Internal Trade (DPIIT) and Ministry of Electronics and IT (MeitY), saying New Delhi’s latest move will hit local companies.

“The industry is already in very deep distress having lost production of over ?40,000 crore and has only recovered to less than 40% of normalcy,” ICEA chairman Pankaj Mohindroo said in the letter.

ICEA said the government is looking to attract US and Japanese investment in manufacturing, drawing them away from China to India. But halting Chinese imports will throw the supply chains of such companies into disarray. A range of Indian companies are also entirely dependent on Chinese inputs in critical areas such as pharmaceuticals, automobiles, electronics, electrical machinery and several others, it said.

“In several cases, companies are also in the process of shifting plant and machinery worth hundreds of crores and such a disruption has left their corporate headquarters nervous about the reasons, duration and the process regarding such unannounced disruptions at customs,” ICEA said.

It proposed that companies having Authorised Economic Operator (AEO) status, accorded after stringent conditions are met by international importers in line with guidelines of the World Customs Organization, should be exempt from such manual checks. Inputs for exports should be X-rayed or checked by dog squads for suspected narcotics, it said. High-end finished goods such as tablets, smartphones and watches with cost net-freight price of ?15,000 should be exempt from such checks as opening up the packaging will make them difficult to sell, ICEA said.

Manufacturers’ Association of Information Technology (MAIT) CEO George Paul echoed the point that importers with AEO status should be excluded from such checks.

Rajan Mathews, director general of the Cellular Operators’ Association of India (COAI), which represents telecom network operators, told ET that the members — Bharti Airtel, Vodafone Idea and Reliance Jio Infocomm — were studying the implications of the development and would lobby the government depending upon the outcome of the discussions.

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Tagged Beijing, Chinese companies, clarity on imports, ficci, lockdown, MAIT

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