India Customs Tightens Clearance Process for Chinese Imports

India had recently tightened physical checks on imports from China, causing delays in clearing of consigned Chinese goods, consequently clogging ports and freight stations in the south Asian nation.

Instead of the usual random checks of imported cargoes, the Indian customs authorities began subjecting all Chinese imports to full physical scrutiny on 22 June, bringing clearances to a halt until 2 July.

The 100% physical checks on Chinese cargoes were conducted without any formal orders from the Indian government, according to industry sources.

Following appeals from domestic industry bodies affected by the delays, customs authorities relented and resumed random checks on the cargoes.

“Ports are now clearing consignments without full physical checking. It could take us around seven days to clear all the shipments that have come in until 30 June,” an official at the Chennai Port said.

The recent full physical checks as well as ongoing antidumping probes on Chinese goods are among measures being undertaken by India to reduce its import dependence on China, government and industry sources said.

Efforts toward this goal have intensified since mid-June in the wake of a deadly border clash between Indian and Chinese troops.

Domestic Industries at Risk Sans China Imports

A number of Indian industries, however, rely heavily on imports from China and delays in consignments’ release could disrupt domestic production.

“The industry is already in very deep distress and has only recovered to less than 40% of normalcy,” India Cellular and Electronics Association (ICEA) president Pankaj Mohindroo said in a statement.

ICEA is a body representing domestic smartphone manufacturers.

In the pharmaceutical industry, the delays in release of consignments had hindered supply of key starting raw material, intermediates and active pharmaceutical ingredients (API), Pharmaceutical Export Promotion Council (Pharmexcil) chairman Dinesh Dua said in a statement.

India, which is the third largest global manufacturer of drugs, imports more than 60% of its APIs from China, as per government data.

While relieved that consignments are now being cleared, automotive industry representatives warned that any further disruptions must be avoided.

“The industry is piecing itself together as growth is limping back; any further disruption at this juncture is best avoided,” said Rajan Wadhera, president of Society of Indian Automobile Manufacturers (SIAM).

India is gradually emerging from a nationwide lockdown imposed to curb the spread of the deadly novel coronavirus pandemic.

Automotive Component Manufacturers Association of India (ACMA) president Deepak Jain stated that “the non-availability of even a single component can lead to the stoppage of the vehicle manufacturing lines.”

Meanwhile, India is also currently planning to tighten restrictions on more than 370 goods originating from China, a source at the Ministry of Commerce said.

Chemicals end-users were required to submit by 24 June details of raw materials they import and the country of origin, as India may be producing sufficient quantity of the materials being imported.

Measures to reduce import dependence on China include stringent quality control measures, mandatory licensing norms and incentives for domestic producers, he said, adding that the government would also actively help Indian producers source raw materials from other countries.

This is expected to encourage domestic production of industrial goods, telecommunication products, electronics, steel and chemicals, he said.

“In some sectors, despite domestic production, imports are large and unnecessary. Quality control standards and high tariffs will ensure cheaper, low-quality products do not enter the country,” the source at the ministry said.

While some Indian industries welcome these moves, others want the government to pace out its reforms.

Careful Planning A Must

Federation of Indian Export Organisations (FIEO) president Sharad Saraf had called for “a calibrated approach to reducing imports from China because our industry is dependent more on industrial inputs from China than from any other country”.

The FIEO is the apex body of the export promotion councils and represents over 100,000 Indian exporters.

While the US, Vietnam, Japan, Mexico and some European countries could be tapped as alternative import sources, there could be cost differentials, Saraf said.

India should ensure availability of reasonably priced raw materials while banning imports of finished goods from China, said a source at the All India Plastics Manufacturers Association (AIPMA).

“A ban on the import of plastic finished goods from China will help the Indian medium small and micro enterprise (MSME) sector,” he added.

In April 2019-February 2020, India’s total imports from China stood at $62.4bn, bringing the southe Asian country’s trade deficit with its northeast Asian neighbour at $46.8bn, according to official data.

China is the largest source of Indian imports during the 11-month period, accounting for 14.3% of the total, followed by the US with a 7.5% share.

Imports of organic chemicals from China stood at $7.53bn, while those of plastics totaled $2.58bn for the period.