India's stricter quality controls set to hurt imports from China

A shop selling made-in-China toys at a market in India's Kolkata. For India's toy retailers, who import everything from toy cars to musical phones and even robots from China, new requirements on quality set by New Delhi meant supply disruptions befor
A shop selling made-in-China toys at a market in India's Kolkata. For India's toy retailers, who import everything from toy cars to musical phones and even robots from China, new requirements on quality set by New Delhi meant supply disruptions before the Deepavali festive season.PHOTO: REUTERS

Rules come as diplomatic tensions over countries' shared border rise

NEW DELHI • India is tightening quality controls for consumer and capital goods, officials say, a move that follows calls to curb cheap imports from China amid diplomatic tensions between the world's two most populous nations over their shared border.

The new rules target toys, electronic goods, machinery, food processing, construction and chemicals, sectors dominated by China, and come amid greater scrutiny of mainland firms looking to enter India's multibillion-dollar power transmission and telecoms business.

For India's toy retailers, who import everything from toy cars to musical phones and even robots from China, the new requirements meant supply disruptions just ahead of the Deepavali festive season.

The government's Bureau of Indian Standards (BIS) has approximately 23,000 standards across industries, many of which are never fully enforced, officials say. Now, government departments have been asked to carry out laboratory tests and spot inspection to ensure goods conform to the regulations.

"We have started this work on a war footing, to have quality control orders for almost every product that we are consuming in the country," according to Mr Ramesh Abhishek who heads the Department of Industrial Policy and Promotion.

The new rules apply to both foreign manufacturers and domestic firms. However, two people familiar with trade policy said the sectors targeted are ones in which China controls more than two-thirds of the market, such as toy and stainless steel goods industries, and where there have been "chronic" complaints of substandard products.

Bilateral trade between India and China boomed to US$71.45 billion (S$97 billion) in 2016-17 from US$1.83 billion in 1999-2000, though most of this is skewed to Chinese exports.

Separately, Indian Steel secretary Aruna Sharma said her department will soon release new guidelines, raising quality norms for welded stainless steel pipes that are used in oil and gas, as well as the construction sector.

"There is evidence of China exporting semi-finished and finished goods using stainless steel that does not meet the BIS standards," Ms Sharma said.

India's Trade Ministry did not respond to Reuters' request for comment on the new rules.

Bilateral trade between India and China boomed to US$71.45 billion (S$97 billion) in 2016-17 from US$1.83 billion in 1999-2000, though most of this is skewed to Chinese exports.

The trade deficit has widened to US$51.1 billion over the past year, a ninefold increase over the last decade, despite repeated Indian calls for China to address the imbalance and open its markets.

Those trade differences are now being amplified by the resurfacing of a long-running border dispute, which has stirred protectionist sentiment in India.

In June, a nationalist group tied to Prime Minister Narendra Modi's ruling party began a campaign to discourage the use of Chinese goods in the country.

The Swadeshi Jagran Manch, an affiliate of the main Hindu nationalist organisation that fights for domestic industry and agriculture, is planning a protest rally in Delhi later this month against the influx of Chinese products.

Several toy importers are urging the government to delay the new regulations until the festive season is over, saying it would choke supply.

"It comes out of the blue, with no forewarning and gives no time for retailers to prepare for compliance," said Mr Kumar Rajagopalan, chief executive of the Retailers Association of India that represents over 1,000 members.

"As a result, it will have grave consequences, such as losses in terms of huge amounts of money paid as advance by retailers to suppliers overseas and a loss of jobs as some businesses that sell only toys will have to shut shop."

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 19, 2017, with the headline 'India's stricter quality controls set to hurt imports from China'. Print Edition | Subscribe