Take product liability cover for long-term contracts with foreign buyers

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: We manufacture rubber filter parts, which are used in the auto industry. We would like to find out about the countries where these products are being exported. Could you tell us from where we can get this information.

—Saluja Rubber Udyog, Ballabgarh, Haryana

Fortunately, with the computerisation of DGCI&S, the commerce and industry ministry has made trade data available on the internet through the website http://commerce.nic.in/eidb/default.asp.

This is an excellent source and the data is fairly reliable. You can get data for values of both imports and exports from 1997-98 onwards, with break-ups for countries, regions and commodities. You simply need to know the ITC HS code for your product. Else, you can get the relevant ITC HS code by giving the description of products from this web site.

I own a small company in Agra. We manufacture small pumps. Recently, a large US buyer visited us and approved our product. They intend to market it as their own brand. But they are insisting on a product liability clause in the agreement, the value of which is many times the value of product. Our company is small and we cannot bear the risk of liability if something goes wrong with the product. There is very little we know about it. What do other companies do in this situation?

— Vijay Goel, Agra

Increasingly, Indian SMEs are entering into long-term alliances with their foreign counterparts where Indian companies manufactures the product and the foreign company markets it. One of the issues in long-term agreements is product liability. Without this clause, long-term contracts are difficult to secure. Particularly in the US, there are instances of consumers demanding hefty compensation against loss or damage to buyers on account of some defect in the product or service concerned.

To meet this obligation, assistance is needed in two areas:

• In understanding the implications of the clauses of ‘product liability’ and estimating the cost of future obligations.

• On the basis of cost estimation, identification and taking up appropriate insurance cover.

There are many companies offering product liability cover in India viz. New India Assurance, Iffco-Tokio, ICICI, Tata-AIG, among others.