Vocal for local: Concerned over low-grade imports, especially from China, govt firms up technical regulations

Concerned over unabated imports of substandard products, especially from China, the government has firmed up technical regulations for 150 products, official sources told. Imports of these products were to the tune of $47 billion in FY19.

The move is part of the commerce and industry ministry’s drive to harden a crackdown on imports of low-grade products by formulating standards for 371 key products, in the first phase, which encompassed imports of about $128 billion, or a fourth of the total purchases from overseas, in FY19.

The items in the current list of 150 products include consumer electronics, steel, heavy machinery, telecom goods, chemicals, pharmaceuticals, paper, rubber articles, glass, industrial machinery, some metal products, furniture, fertiliser, food and textiles.

However, keeping with the principle of free and fair trade and to ensure domestic consumers have access to quality products, both Indian manufacturers and foreign suppliers will have to conform to the same standard specifications.

While the move isn’t Beijing-specific but it could hurt the neighbour the most, as China is the biggest supplier of cheap and low-grade products to India. The idea is not just to curtail substandard imports but to improve local output of quality products as well. This will, in turn, help boost exports and substitute imports, in sync with Prime Minister Narendra Modi’s push for Atmanirbhar Bharat and the commerce ministry’s renewed focus on free and fair trade strategy, according to one of the officials.

Already, the government has imposed 50 standards in the past year alone. These products include toys, electronic goods, air-conditioners, bicycle parts, chemicals, safety glass, pressure cooker, steel items and electrical items such as cable.

Since substandard products are usually imported at much cheaper rates, they not just pose risks to consumer health and environment but also hit domestic manufacturing because of the price competitiveness. Many countries, especially the big economies, therefore, subject their imports to rigorous technical standards and sanitary and phytosanitary measures.

India’s latest move to develop technical specifications for products marks a shift in its approach to curb substandard products (Its earlier approach was to raise tariffs).

Analysts have said India seems to have taken a cue from major developed and developing nations that have effectively employed various non-tariff measures to target non-essential and substandard imports. For instance, the US has put in place as many as 8,453 non-tariff measures, followed by the EU (3,119), China (2,971), South Korea (1,929) and Japan (1,881), shows a commerce ministry analysis. In contrast, India has imposed only 504 of them.

Last December, in an inter-ministerial meeting chaired by commerce and industry minister Piyush Goyal, it was revealed that while most of India’s key partners had built in elevated levels of non-tariff measures, only about 10% of New Delhi’s imported products were subject to various standards; the rest remain unregulated even from basic safety and environment parametres.

Goyal had then asked the Bureau Of Indian Standards (BIS) to develop standards for over 4,500 products (HS lines), taking the total number of imported items where quality and other parameters would be in place to 5,000. Of these, regulations for 371 products were to be developed in war-footing, although the Covid-19 outbreak slowed down the process a tad.

India’s imports rose by more than 10% year-on-year to $514 billion in FY19, although the purchases from overseas contracted by almost 8% in FY20 and close to 40% in the first half of the current fiscal, mirroring demand compression in the economy before and after the Covid-19 outbreak.