Tag: China imports

Customs inspection norms for top importers eased; relief for Toyota, Honda, Samsung, LG: Sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A week since customs authorities started scrutinising consignments from China at all major ports, there appears to be some let up. Industry sources told CNBC-TV18 that top tier importers are being exempt from the 100 percent examination drive. This comes as a relief for firms like Toyota, Honda, Samsung, LG, HP and Siemens.

Sources said importers who qualify as AEO-T3, are eligible for these relaxations. Only 11 companies meet the AEO-T3 criteria.

In July 2016, the Customs department had launched the Authorized Economic Operator or the AEO scheme. Under this scheme, as per global best practices, importers and exporters would be required to demonstrate compliance with legal, safety norms of international trade, as prescribed by the Customs. Correspondingly, the classification as AEO would allow importers and exporters benefits such as fast tracking shipments, waiver from issuance of guarantees, deferred payments of duties and preferential treatment by Customs.

Importers and Exporters are classified as AEO-T1, AEO-T2 and AEO-T3, where T3 represents the highest level of compliance on legal, safety and security parameters.

This relaxation, however, will do little to address the wider issue of Customs restrictions on Chinese imports. Only 11 out of the 3500-odd entities, registered under the AEO scheme, fall in the T3 category.

The inspection drive by the Customs was reported to have begun around June 22, with the authorities refusing to clear imports from China without 100 percent inspection. Previously, only around 30 percent of the consignments would be subjected to checks, with 70 percent being cleared on filing of Bill of Entry.

Importantly, there is no formal order or circular from the government to the Customs department. The US India Strategic Partnership Forum (USISPF), a representative body of American Companies manufacturing in India, had red flagged the lack of transparency. The USISPF urged that at the very least, Customs should publish the policy or orders for taking such measures, to allow room for certainty, predictability and planning for global investors.
The industry has been protesting against what they call as an opaque and arbitrary move. Various sectors such as mobile, electronics, auto and pharmaceutical have been impacted severely.

The Indian Cellular and Electronics Association, a grouping of cell phone manufacturers in India, had written to the Finance Minister, flagging supply chain disruptions. In the letter to the FM, the ICEA had argued that the adverse action by Customs had impacted over 200 factories. The letter had cautioned that for global companies needed to have confidence in the logistics machinery, to invest in India.

Similarly, the Society of Indian Automobile Manufacturers (SIAM) has moved the government for clearing up import congestion at ports. SIAM believes that manufacturers are likely to begin feeling the impact of disruption if the congestion at the ports continue.

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Importers with held up consignments at ports worried; customs examination yet to begin

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Importers whose consignments from China have been held up at ports and container freight stations across the country are a worried lot.

It has been five days since the consignments were held for examination, but the process has not yet begun, sources told CNBC-TV18.

The instructions to customs officials clearing the cargo, from their superiors are to “Open and de-stuff all container cargo and examine 100 percent (all packages) at the item level. Verify declared quantity, description, address, other notification claimed valuation, and check for concealment”, according to information accessed by CNBC-TV18.

Customs officials say they have received a tip-off from intelligence agencies about narcotics being brought in via Chinese containers. But with the containers not yet being been opened for examination, importers are worried about the additional costs, opportunity and actual.

Most Chinese import orders are pre-paid as the country rarely ships orders on credit. Add to that the penalties on delays that importers will have to pay shipping lines and Container Freight Stations (CFSes), if these are not explicitly waived off by a government order.

Container Freight Stations and shipping lines are privately operated.

Industry bodies have highlighted that prolonged delays will hamper production by affecting the supply chain.

“We fear that if the supply chain is broken then 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 the COVID-19 outbreak,” electronics body ICMEA said in its letter to the Finance Ministry and customs authority. It also said that opening finished products could lead to their getting soiled and becoming unfit for sale.

Industry bodies are worried about the lack of official communication from the government to port authorities or to the companies about the timelines for releasing the containers. Customs officials have only verbally passed on these orders to all authorities including ports and CFSes.

According to import-export traders, shipments are routinely held and examined based on intelligence reports but not at this scale.
Importers have already paid heavy demurrages during lockdown period, and fear this will pile on heavy penalties on them as shipping companies and port authorities have not waived off any so far.

Shipping company DHL Express has suspended picking shipments from China, Hong Kong and Macau destined for India with immediate effect for the next 10 days. The move comes amid uncertainty surrounding clearance of consignments from China and Hong Kong at sea and airports in India, DHL Express said.

“Over the last few days we are witnessing a severe lag in customs clearance for shipments originating from China, Hong Kong and Macau across all the ports in India”, DHL said in an email to clients who were adversely impacted, a copy of which was seen by CNBC-TV18.

The letter read, “This [the lag in clearance] has led to uncontrollable queuing, congestion and delays of shipments in our clearance ports across the country.”

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Chinese imports continue to be held back at ports as Customs orders thorough examination

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Import shipments originating from China and Hong Kong are held back at major Indian seaports and airports since Monday, sources with knowledge of the matter have told CNBC-TV18.

Customs authorities in Chennai, Delhi, Kolkata, and Ahmedabad have ordered these consignments to undergo a “100 percent examination” at the item-level, leading to significant delays. Even those shipments which have been given an Out of Charge (OOC) order are being held back at ports and container freight stations.

Authorities have instructed that “Open and de-stuff all container cargo and examine 100 percent (all packages) at the item level. Verify declared quantity, description, address, other notification claimed valuation, and check for concealment”, according to information accessed by CNBC-TV18.

While there is no official reason being cited for these actions, customs officials are acting on intelligence inputs after drugs, suspected to be from China, and were seized by the Tamil Nadu police in two separate incidents.

ALSO READ: Industry tells CNBC-TV18 says reliance on Chinese imports is huge, expecting clarification by tomorrow

Email queries, phone calls, messages sent to Finance Minister, Revenue Secretary, Chairman CBIC remained unanswered at the time of reporting.

However, according to sources, this could also be a suspected soft signal from the government in the face of the current standoff with China. The government, however, has said there are no written or verbal orders to restrict shipments from China.

According to import-export traders, shipments are routinely held and examined based on intelligence reports but not at this scale.

Importers have already paid heavy demurrages during lockdown period, and fear this will pile on heavy penalties on them as shipping companies and port authorities have not waived off any so far.

Delay at the Customs House

There is also a delay in the Bill of Entry (BOE) assessment at the Customs House. People in the know, say a majority of bills of entry for consignments from China are with appraisers, and supporting documents such as detailed catalogues, etc. are being sought by the officers for due diligence before assessment.

From other Indian ports such as Chennai, bills of entry filed prior to June 24 and pending for OOC are being re-directed to groups for custom examination order as per the system instructions.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Import disruptions hurting supply chain, electronics body tells FinMin, customs authority

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian Cellular and Electronics Association has written to the Finance Ministry and to the Central Board of Indirect Taxes and Customs (CBIC), saying that sudden import disruptions were hurting the industry.

Earlier this week, certain consignments from China were held at some ports in the country, with customs officials citing ‘intelligence inputs’ as the reason.

Annually, India imports around $56 billion worth of electronic items from China.

In its letter, ICEA said that companies were nervous about the duration of the disruptions, which were being faced across the country.

“We fear that if the supply chain is broken then 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 the COVID-19 outbreak,” ICMEA said in its letter.

ICEA said that insistence on 100 percent examination by the Customs could lead to pilferage and soiling of products.

“We understand that even goods already cleared and loaded in trucks
for transport to the users’ warehouse are being recalled and examined. Opening up finished products for full examination will soil them, making it impossible to sell in the market. This will lead to millions of dollars of losses, a shortage in the market, and spook large foreign investors,” ICMEA wrote.

The body requested that the review the policy and stop the 100 percent examination of only China origin goods so that the supply chain could move without hurdles.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Chinese consignments to be held at Chennai ports, will experience delays in clearance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Customs officials in Chennai have instructed all authorities handling import consignments originating from China not to clear them until further notice.

The Chennai Commissionerate has issued instructions internally to port terminals, the airport, and all container freight stations (CFSes) to hold all cargo from China, even those shipments which have been cleared with an OOC.

A shipment given an OOC, or Out of Charge order is cleared by customs and found to have no discrepancies. However, even these shipments will be allowed to be delivered only after a re-examination by customs authorities.

According to sources, GV Krishna Rao, Chief Commissioner of the CGST and Central Excise of Tamil Nadu and Pondicherry informed importers that the cargo will be subject to re-examination due to intelligence inputs received by the excise authorities.

The intelligence received by the department could be based on breach of anti-dumping rules, inferior or wrong items in the shipment etc. Given the Covid-19 pandemic and the standoff between the Indian and Chinese armies in Ladakh, there is speculation over the grounds for re-examination.

In this case, the Chinese shipments in Chennai were put on hold and a re-examination ordered after Tamil Nadu police reportedly found crystal meth in tea bags with Chinese lettering, in two separate incidents in the state.

The Chennai Customs Brokers Association wrote to members asking them to prepare for delays in clearance of China-origin cargo arising from ports, CFSes, and airports. In a letter to members, it said, “An official trade notice/circular is still awaited from customs. Our association is in touch with customs officials to get further instructions on releasing the cargo which is under clearance”, it said.

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Some China containers held at ports; govt denies any move to block Chinese goods

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Certain consignments of goods coming in from China have been held at a few ports for security concerns, CNBC-TV18 has learned from senior government officials and other sources.  The containers have been held and parked at isolated docks.

When asked about the development by CNBCTV18,  senior finance ministry officials said there was no directive from the government on this.

“No orders, verbal or written, have been issued to any port by customs or by the central board of indirect taxes and customs (CBIC) to bar or not to accept containers from China. If in some cases, some containers are held up then they are for the intelligence input and on the basis of risk assessment, which a routine and on-going exercise,” a senior Finance Ministry official told CNBC-TV18.

On further inquiries, it was learned that the move to hold certain containers/ consignments following intelligence inputs was witnessed at few ports of Chennai and Mumbai.

Holding containers/ consignments based on security alerts, till they are formally cleared is not a new trend.

But the timing does raise eyebrows, coming as it does amid the skirmishes at the India-China border.

When asked, senior customs officials clarified that the move had nothing to do with the developments at the border. 

“It is a decision only for some consignments/ containers and not all coming from China and it will be wrong to call it as an anti-China decision taken by the government,” a senior customs official, who did not wish to be quoted, said.

Rather, the move is based on an intelligence alert that  China could send certain deliberately coronavirus-infected goods to further create panic in India, the official said.

These consignments/containers have been kept at isolated docks for further investigation and sanitization before they are formally cleared for human interaction in the country, the official said.

He clarified that the move was not aimed at blocking Chinese imports and these containers would be cleared after a detailed examination, as per routine process.

Meanwhile, the clamour to boycott Chinese goods is getting louder, but the government is not made any formal statement on the issue even as moves are afoot to reduce dependence on Chinese imports.

A survey by market research firm LocalCircles showed that 87 percent citizens were willing to boycott Chinese products following the clashes the border.

“Sentiment has been hurt and many are willing to buy Indian counterparts of Chinese products though they know it will cost more”, said SachinTaparia, founder of LocalCircles.

The survey also found that 42 percent of the respondents favoured a 200 percent duty on Chinese products and imports to be permitted only when the products met Indian standards.

Industry associations are also trying to convince their members, traders, manufacturers to slowly move towards local produce rather than depending on cheap Chinese imports.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Chinese imports curbs: DPIIT shares second list of 1172 items; India Inc worried about supply chain

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian government appears to have upped the ante on reducing import dependence on China as the border issue still remains unresolved.

The Department For Promotion Of Industry and Internal Trade (DPIIT) has prepared a second list covering 1172 Made In China items ranging from toasters to elevators, and has sought comments from India Inc on import curbs.

This is the second list shared by DPIIT in the past three days with industry associations for their comments.

Sources told CNBC-TV18 that bodies like FICCI, Assocham and CII have gone into a huddle to assess the impact of import curbs on items mentioned in the new DPIIT list. The nature of the proposed import curbs that DPIIT proposes to impose is not yet known.

Members of industry associations told CNBC-TV18 that several items in the new DPIIT list are critical for manufacturing value chains in India as those goods are not made in India.

“We need to be careful before imposing import curbs on the items which DPIIT has prepared. Import curbs not advisable on items not made in India. This will disrupt domestic value chains,” said a member of one of the industry associations who has seen the list.

The list mostly covers items from sectors like consumer goods, battery parts, auto components, electrical machinery as well as industrial goods and machinery.

Consumer goods included in the new DPIIT list includes toasters, refrigerators, air conditioners, coffee makers, microwave ovens, shavers, cutlery, and even sewing machines.

Electrical goods where DPIIT wants to impose import curbs include circuit breakers, high capacity switches, resistors, generators as well as DC motors.

The list also includes goods like elevators, roller bearings, valves, pneumatic tools, parts of food processing machinery and coal handling plants. Critical battery related items like lithium and primary cells are also included in the list.

In FY19, imports of goods in the DPIIT list pf 1172 items were valued at $ 12 billion, which was 10 percent higher than the previous year. These items comprise 2 percent of India’s import basket of $ 514 billion in FY19. Overall merchandise imports from China in that year stood at $ 70.31 billion, which was 10 percent higher than the previous year.

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Coronavirus: Facing shortages, India bets on China for swift ramp-up of protective health gear

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India will buy ventilators and masks from China to help it deal with the coronavirus, a government official said on Tuesday, even though some countries in Europe had complained about the quality of the equipment.

India has recorded 1,251 cases of the coronavirus, with 32 deaths, but health experts say the country of 1.3 billion people could see a major surge in cases that could overwhelm its weak public health system.

Prime Minister Narendra Modi’s government said it was trying to procure medical gear, including masks and body coveralls, both from domestic firms and from countries like South Korea and China, to meet shortages.

“China, definitely we are going to buy … Because scaling up our domestic production will take time,” said a top Indian policy official aware of the plan, who declined to be identified due to sensitivity of the discussions.

The Netherlands has recalled thousands of masks imported from China because of quality issues, while Spain has complained about defective imported test kits supplied by a Chinese manufacturer, media have reported.

China’s foreign ministry said several countries had raised doubts about the quality of products imported from China, and acknowledged that there might be some problems.

“A large number of Chinese manufacturers are working around the clock to help other countries save lives. Our sincerity and assistance is real. If problems occur in this process, the Chinese side will talk to relevant departments,” China’s foreign ministry spokeswoman Hua Chunying told a news conference on Monday.

A second source with direct knowledge of Indian government plans said Chinese manufacturers had shown keen interest in supplying protective health gear to India, lodging queries with Indian diplomatic missions in Shanghai and Beijing.

China was emerging as a favourite possible supplier at this stage as new virus infections were slowing there and its factories were being pushed to reopen, the second source said.

India needs at least 38 million masks and 6.2 million pieces of personal protective equipment as it confronts the spread of coronavirus, according to a report by its investment agency seen by Reuters.

But Swadeshi Jagran Manch (SJM) an influential Hindu nationalist group close to Modi’s party, said India should look at domestic alternatives because of widespread concern over the quality of China’s equipment.

“I don’t think we need Chinese support of any kind for our healthcare … Even if Indian firms produce at a higher cost, it doesn’t matter,” Ashwani Mahajan, a national co-convenor of the SJM, told Reuters.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China’s January-February exports and imports tumble amid coronavirus outbreak

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China’s exports fell by double digits in January and February as anti-virus controls closed factories, while imports sank by a smaller margin.

Exports tumbled 17.2 percent from a year earlier to $292.4 billion, a sharp reverse from December’s 7.8 percent rise, customs data showed Saturday. Imports declined 4 percent to $299.5 billion, down from the previous month’s 16.3 percent gain.

Trade was poised for a boost after Beijing and Washington removed punitive tariffs on some of each other’s goods in a trade truce signed in January. But that was offset by Chinese anti-virus controls that shut down much of the world’s second-largest economy in late January.

Exports to the United States plunged 27.7 percent in January and February to $43 billion, worsening from December’s 12.5 percent decline. Imports of American goods crept up 2.5 percent to $17.6 billion, but China still recorded a $25.4 billion trade surplus with the United States.

China’s global trade balance fell to a $7.1 billion deficit for the first two months of the year. Manufacturers that make the world’s smartphones, toys and other consumer goods are reopening but say the pace will be dictated by how quickly supply chains start functioning again. Forecasters say industries are unlikely to be back to normal production before at least April.

Until the virus outbreak, Chinese trade had been unexpectedly resilient despite Beijing’s tariff war with President Donald Trump over its technology ambitions and trade surplus. Last year’s exports rose 0.5 percent over 2018.

Beijing told exporters to pursue other markets in Asia, Europe and Africa after Trump slapped punitive duties on their goods starting in 2018. China retaliated by raising tariffs on American soybeans and other goods.

Some of those penalties were rolled back after the two sides signed a “Phase 1” agreement in January. Washington cancelled additional planned tariff hikes and Beijing promised to buy more American farm exports.

Economists warn the truce fails to address contentious US-Chinese disputes that might take years to resolve. China’s customs agency began reporting January and February trade figures together this year to screen out the impact of the Lunar New Year holiday, which comes at different times each year during the two-month period.

Factories traditionally usually shut down for two weeks or longer while their employees visit their hometowns. Imports usually surge after the holiday as factories restock. But this year’s rebound was postponed after the holiday was extended by at least one week — more in some places — to keep factories and offices closed as authorities tried to contain the spread of the coronavirus.

Chinese leaders are trying to limit economic damage by ordering local officials in areas deemed at low disease risk to help factories reopen. But many say they have trouble getting raw materials and employees because controls on travel still are in place in many areas.

The Chinese shutdown sent shockwaves through Asian economies that supply components and raw materials to Chinese factories that assemble the world’s smartphones, toys, home appliances and other consumer goods. Shopping malls, restaurants and other retail businesses also were closed. Demand for online grocery vendors surged but sales of other goods slumped.

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COVID-19: India giving final touches to strategy to cushion impact on India Inc

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As global supply chains that feed factories across the world get disrupted by the outbreak of novel coronavirus, the commerce ministry is giving finishing touches to the strategy to cushion the impact on its exporters and domestic industry. To finalise this strategy, commerce minister Piyush Goyal will meet 31 organisations that represent exporters on March 3. An initial meeting on this issue was held on February 14.

As part of this strategy, the ministry has identified 550 products which can be used to plug gaps in global supply chains as Chinese factories in Covid-19 infected regions remain shut.

According to the estimates of trade diplomats at Udyog Bhawan, the current exports in these 550 goods stands at $243 billion or three-fourths of India’s outbound shipments.

On imports, a similar exercise has been done by the ministry. It has identified 1,050 products which are imported from China, of which in 168, India sees high dependence from the neighbouring country.

“China has a share of 50 percent in these 168 products,” a trade official told CNBC-TV18. “To cushion India’s industries from supply disruptions, the ministry has zeroed in on alternative countries from where these products can be sourced.”

On the exports side, the list of 550 products was shared with all Indian embassies, which were asked to reach out to potential buyers and asses the demand.

“Feedback from embassies are in. For example, several Russian companies evinced interest in buying these products from India,” the official added.

Plugging global supply lines

The 550 products identified by the ministry include cigarettes, carbon Black, human vaccines, antibiotics, therapeutic drugs, insecticides, acrylic polymers, kitchenware, plastic articles, apparels like cardigans, pullovers, jerseys, jackets, steels flats, metal tubes, aluminium plates, internal combustion engines and auto components. Each product line shortlisted by the ministry saw exports worth more than $50 million.

As part of this strategy, it has identified top export destinations of China and India in these 550 product lines. This would help exporters in identifying countries where India could help plug global supply-side loopholes.

For example, in a product like wooden furniture, China exported goods worth $ 8 billion in 2018 to the US, the UK, Australia and Germany. In the same category, India’s exports stood at $ 109 million to countries like the US, Netherlands, the UK, France, the UAE.

Bracing for import disruption

On imports, a similar analysis of 1054 products was done by the ministry. India imported boilers and machinery of $ 13 billion in FY 19, while total imports in the sector stood at $ 44 billion in the same year.

Countries from where India could import goods in this category include Korea, Germany, Italy, USA and Thailand.

Ironing out Issues

Commerce minister Piyush Goyal is expected to fine-tune India’s strategy on Tuesday along with members of export promotion councils and select industrial houses. While the ministry carried out in-depth data crunching to understand the export potential and possible import disruptions, it will be up to the Indian industry to use this information to beef up their presence in global markets.

For example, while many factories have the capability to produce many of these identified goods, there are capacity constraints. “Many companies would need to beef up existing infrastructure which means making additional investments. This could mean dealing with complex issues like facilitating credit and ironing out local supply-side issues. Moreover, many of these factories and exporters may be reluctant to put in additional money in their plants as they may be risk-averse,” the official said.

Sectoral Impact Assessment

Udyog Bhawan has also done a sector by sector analysis on the impact of COVID-19 on the domestic industry. Reflags have been raised on sectors like pharma, electronics and smartphones, cotton and yarn, as well as plastics, where Indian factories would be very vulnerable.

Electronics: Staring at Disruption

Commerce ministry analysis shows that up to 80 percent of the components used by India-based mobile phone manufacturers are imported. Officials are worried that output in mobile phone factories in India could drop by up to 30 percent in March. There could be production slippage in Made in India air conditioners and washing machines as compressor and motor supplies dry up. A similar situation could also impact Indian TV factories which see up to 60 percent dependence on China for components.

Pharma: A Potential Crisis

Pharma company representatives have told commerce ministry that of the 58 molecules imported from China, as many as 12 are manufactured in the worst affected Wuhan province. The only hope for the industry is that it expects API (Active Pharmaceutical Ingredient) factories located beyond 500 km from Wuhan to restart operations by early or mid-March. Pharma industry has suggested that India should go slow on exports of formulations based on at least 16 molecules including Erythromycin, Amoxicillin and Progesterone. The industry has suggested special incentives to restart MSME units producing APIs that had to shut down as they were outpriced by Chinese products.

Cotton  

The cotton industry has told the commerce ministry that China is the biggest market for Indian cotton yarn. In 2019, the neighbouring country imported Indian cotton yarn worth $ 800 million, accounting for more than one-fourth of the country’s exports. The crisis is evident in the fact that Chinese buyers, who start their annual sourcing from India by January, have so far avoided Indian markets.

Plastics

According to plastics industry representation to the commerce ministry, China is the biggest supplier of the material to the country. In 2019, India imported $17 billion worth of plastics, of which $4 billion came from China alone. This imported plastic is used in consumer goods, houseware items as well as polyester films.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow