An ongoing 100 per cent physical inspection of Chinese imports into India has taken a number of businesses by surprise, is leading to delays in the release of cargo, and is a major worry to the Indian smartphone industry in particular.
Although there is a fair amount of tension between the two countries after a recent border skirmish, local news reports suggest that the new inspection regime was the result not of retaliatory action but of an IT system-based alert. Whatever the actual reason, ports and airports across the country have initiated physical checks on Chinese cargo since early this week.
Not surprisingly, the mobile phone manufacturing industry has now stepped in, asking the Finance Ministry to stop 100 per cent examination at ports and airports. As the Indian Cellular and Electronics Association pointed out, production levels are down already and physical checks on items could make it difficult to sell items in the market when they have been handled. In the case of components packaged under certain temperature conditions, sales after inspection might even be impossible.
The normal system allows goods to be cleared automatically without examination for regular importers recognised under AEO – the Authorized Economic Operator system.
At a time when demand for products is higher than supplies, sellers of a number of brands that operate on lean inventory levels are worried that sales will be badly hit. Component supply is also likely to be interrupted.
China is a major sourcing base for India’s electronics industry, both in terms of components and a number of finished products.
There have been some suggestions that this is a routine process that takes place on occasion, but the timing – when demand is high after a major lockdown – makes this a much more disruptive event than it might otherwise have been.