With import consignments from China facing hurdles in getting clearance at domestic ports amid continuing border tensions, various industry associations have written to the Centre seeking clarification on the “unannounced and opaque” move, while also warning of acute shortage of components and finished products in sectors such as pharmaceuticals, automobiles, electronics and electrical machinery.
The industry representatives also pointed out that in response, Hong Kong and Chinese Customs were now holding back export consignments from India. The disruption, they added, sends a “chilling signal” to foreign investors, who look for predictability and transparency.
Restricting imports of Chinese items will not serve any purpose until India has the capacity to produce those items or can import them from other countries at comparable prices, the president of Federation of Indian Export Organisations (FIEO), S.K. Saraf, said on Thursday.
In a letter to Commerce Secretary Anup Wadhawan, Mr. Saraf said, “We have been given to understand that customs is physically examining all imports from China which is delaying clearance, adding to the cost of imports. Some exporters have informed that, in response to such action, Hong Kong and Chinese Customs are also holding back export consignments from India.”
While requesting the Secretary to take up the matter with the CBIC [Central Board of Indirect Taxes and Customs], he added, “...if no such instructions have been given, a denial may be issued by CBIC so that the matter may be communicated to our importers in China and Hong Kong to suitably take up with their Customs explaining our stand.”
The mobile and electronics industry, which has also been severely impacted by the disruption, said if the supply chain is broken there will be severe shortage of essential communication, equipment required for health, work-from-home and online education, goods such as smartphones, tablets and laptops, since alternative supplies are not available in the local and global markets amidst COVID-19 outbreak.
President of India Cellular & Electronics Association (ICEA) Pankaj Mohindroo, in a letter to Union Finance Minister Nirmala Sitharaman, said the disruption comes at a time when the industry has just begun to limp back to normal after massive losses for three months. He stated that industry needs to have confidence that the global logistics machinery will function without disruption in India.
“Regardless of the reasons, such a move, especially without any prior notice, can be counterproductive. Essential parts, components and accessories required for manufacture in the 200 plus factories which came up following the adoption of “Make in India”, “Digital India” and “Phased Manufacturing Programme (PMP)” in the mobile industry are in the hit list,” Mr Mohindroo said.
In a separate letter to Revenue Secretary Ajay Bhushan Pandey and CBIC Chairman M. Ajit Kumar, Mr Mohindroo said the member companies, which represent a combination of Indian, American, European, Japanese, Taiwanese and other countries, began facing disruption at Chennai airport from Monday night onwards and this has now spread to several ports and airports across the country.
Among other things, all shipments are being subjected to open examination, including opening of each box and repacking, without any written orders for the same. The move, particularly in case of high-end electronics equipment such as laptops, tablets, watches and smartphones, may result in pilferage and soiling of packaging and boxes, making it impossible for companies to sell such products in the market.
“At a time when the government is strategically targeting shifting investments of international firms — especially U.S. and Japan — from China to India, a disruption in the supply chain by way of disturbance at airports will not only hurt the supply chain of foreign companies, but also an entire range of Indian companies — large and small — which are entirely dependent upon Chinese imports of inputs in critical areas such as pharmaceuticals, automobiles, electronics, electrical machinery and several others,” he said in the letter.
The letter also noted that it is critical that at this stage India ensures smoothest possible transition of supply chains and goes the extra mile to give the country and global industry the confidence that India can be a viable alternative with least bureaucratic challenges when it comes to importing inputs that are required for the functioning of vital supply chains.
Likewise, the U.S.-India Strategic Partnership Forum (USISPF) in a letter to Mr. Wadhawan has expressed concern over component parts and other inputs necessary to manufacturing being detained at the ports.
“I urge you to restore port operations so that industry can continue to keep their manufacturing facilities operating and their employees working. At the minimum, we request the government publish any change in port policy to provide the business community with the visibility they need to function,” Mukesh Aghi, President & Chief Executive Officer at the USISPF said in the letter.
Mr. Aghi said India’s manufacturers need transparency and visibility into any disruption that will impede goods being brought into the country. “Whilst we support India’s ambition to expand its manufacturing capability, we are concerned about the repercussions an unanticipated embargo on the import of goods from neighbouring countries will have on the supply chain and manufacturing. This will send a chilling signal to foreign investors who look for predictability and transparency,” he said.