A rising number of disputes with China has prompted India to issue a trade advisory, cautioning companies from entering into contracts with Chinese firms without conducting thorough credential checks.

A total of 86 cases of trade disputes, involving $2.9 million, were reported by the Indian Embassy in Beijing last year. This marked a decline from previous years — disputes worth $4.8 million were reported in 2011, down from $5.4 million and $7.8 million in 2010 and 2009, respectively.

The advisory, however, said that in spite of issuing earlier warnings, “a number of Indian SMEs” were not following previous advisories. They were, the advisory said, still “placing orders with unverified Chinese companies listed on B2B sites like Alibaba, tradeb2b.net, etc., sending advance payments to the bank accounts of unverified Chinese companies and not conducting physical inspection of the goods at the point of loading.”

Many of the cases last year were reported from northern China, with 24 cases in Hebei province and 16 in the northeastern port city of Tianjin, among the 86 cases.

The advisory called on companies to run “a complete credential check” on any prospective Chinese partner and to refrain from trusting B2B sites for a list of importers or exporters. A list of “do’s and don’ts” has been published by the Indian Embassy in Beijing on its website.

The warning comes amid continuing steep declines in trade between India and China. New trade figures released here on Wednesday by the General Administration of Customs showed bilateral trade, after three months of the year, was down 8.2 per cent overall, to $15.23 billion.

Indian exports to China are down by as much as 27.8 per cent, reaching only $4.46 billion as of March.

The fall in exports comes amid bans on exporting iron ore, which has largely driven Chinese imports. Bilateral trade fell by 12 per cent last year to $66 billion, with the deficit reaching a record $29 billion.