Indian customs could carry out 100 per cent checks of Chinese import consignments at ports on the back of heightened security concerns following tensions at the border, people familiar with the development said. The move, possibly aimed at discouraging Chinese imports, could lead to delays in the release of consignments.
However, the government played down the move with officials saying that no such instructions had been issued and containers may have been held up on the basis of risk assessment or intelligence input.
Chennai is one of the first ports to opt for such closer scrutiny of Chinese imports, they said, adding that this is likely to be extended to all key ports.
“There is an internal instruction from customs to all custodians of cargo including port terminal, airport and all customs freight stations to hold all consignments which have originated from China,” said a statement from the Chennai Customs Brokers Association on Monday. “It prerevails at all locations in India... So there could be some delay in clearance from all the ports/ CFS/airports.”
Currently, 70% of total imports pass through the green channel once the bill of entry is filed. This happens online with little or no difficulty; only 30% is examined. Physical examination includes matching description to bill of entry, whether the goods are correctly valued — as these could be undervalued — and whether they are eligible for exemption of duty. The latest moves will delay clearance, particularly due to low staffing on account of Covid-19. In many cases, goods will have to be unpacked in the presence of importers for checking.
Industry insiders said Chennai port is a key gateway for telecom parts and equipment for many Chinese companies operating in the country. It is also a major port for the import of auto components from China.
There is no formal instruction to stop clearances but importers have not been able to secure release of consignments, said one of the persons. “Importers have been told that consignments need to be examined and sanitised for Covid-19 with due procedures,” said an industry expert, adding that the move seems to have been prompted by an alert.
“100% physical examination means delay in clearances,” said another person privy to the developments.
The development rattled industry, with multiple consignments getting stuck, prompting some importers to take up the issue with local customs officials.
The manual checking of all items is “spooking the industry as it will soil, damage the imports which are critical not just for domestic production but also for exports out of India”, said Pankaj Mohindroo, chairman of the India Cellular & Electronics Association (ICEA).
Lava, Foxconn, Oppo, Vivo, Flextronics and Apple are among members of the association. “Authorities have assured that the issue would be resolved soon,” said an official with an export body. A senior executive at an electronics contract manufacturer said checks were intensive on Monday and consignments that had been approved were recalled and checked. “By (Tuesday) afternoon, our people were getting the consignments released,” said the person.
The government declared that it hadn’t ordered ports to halt shipments from China but acknowledged that some containers could be held up. “No orders, verbal or written, have been issued to any port by customs or by the Central Board of Indirect Taxes & Customs (CBIC) to bar or not to accept containers from China,” a government official said in response to a query from ET. “If in some cases, some containers are held up then they are for the intelligence input and on the basis of risk assessment, as a routine exercise".
Customs authorities played down concerns over clearance. “System-generated checks are going on,” a senior Chennai customs official said. “Doing it for each container would be a huge time-taking exercise.”
About 300-500 bills from China are cleared on a daily basis at Chennai customs, a large chunk of the overall number. If consignments are halted, it could lead to the ports getting choked and delays in goods reaching, the official added.
There has been a growing view within the government that clearance of Chinese imports should be permitted only from ports on the west coast, but no decision has been taken so far on this.
India is eyeing several measures to contain dependence on Chinese goods, particularly non-essential ones. The move has been in the works as part of the self-reliance drive, but has gained momentum after the border tensions.
India-China bilateral trade was $87.1 billion in FY19 — India exported goods worth $16.8 billion while imports added up to $70.3 billion, for a trade deficit of $53.6 billion. Efforts to reduce this deficit have not yielded results.
“One of the fallouts of Covid-19 is increasing localisation and many countries are focussing on it. India is not an exception,” said Ajay Sahai, director general, FIEO.
‘KEEP INDUSTRY IN LOOP’
Experts said policy changes should be communicated to industry. “The importers need to be aware of the policy decision, if any, on possible port of import and clearance procedures since a number of these products are being imported from China in Chennai port which caters to a large catchment of manufacturing hubs,” said Bipin Sapra, partner, EY.
The decision to conduct full physical examination and assessment at the docks and sheds in airports follows a rider on 100% examination of Chinese imports that was introduced by the apex indirect tax body Tuesday, said people with knowledge of the matter.