Consignments of even the green channel importers, who normally get clearance automatically, are being inspected
The sudden move of the customs authorities to carry out 100% checks of import consignments coming from China at the ports has thrown the domestic industry into a tizzy at a time when it’s still far from full recovery from the impact of lockdown. Though such a move by the authorities – understandably without any written instructions from the higher-ups in the government – would adversely affect several industrial sectors, but the immediate pinch is being felt by the electronics player.
What has spooked the industry is that such checks are being carried out on the consignments of even the AEOs (authorised economic operators) – green channel importers – who under normal circumstances get clearance automatically without any examination based on their size and past track record.
Though the government denied having given any such instructions to the customs authorities at the ports, a statement by the Chennai Customs Brokers Association, said, “There is an internal instruction from customs to all custodians of cargo including port terminal, airport, all customs freight stations to hold all consignments which have originated from China. It prevails at all the locations across India.”
The electronics sector – manufacturers of smartphones, tablets and laptops – source a bulk of components from China and generally work on very thin stocks, barely of a few days and hence any delays in clearing consignments throws their entire production schedule out of gear.
The vendors of automobile manufacturers also source components from China but their inventory levels are of few weeks therefore they do not face any immediate crunch, but if the delays run into a longer period of time, they too would feel the pinch.
Other engineering sectors like steel etc, source mainly machinery parts from China, where the frequency is maybe twice a year, so they are better placed.
Industry sources said that the latest move of the customs authorities spurs from the border tensions between India and China.
Urging finance minister Nirmala Sitharaman and revenue secretary Ajay Bhushan Pandey to look into the matter, Pankaj Mohindroo, chairman, ICEA (India Cellular and Electronics Association), wrote, “The industry is already in very deep distress having lost production of over Rs 40,000 crore and has only recovered to less than 40% of normalcy. We have just begun to limp back to normal after a massive set of losses for three months – and now this. India is at a very crucial moment with the launch of PLI and two other schemes which require a high level of motivation in the headquarters of global and local companies. They need to move large amount of plant and machinery, components, sub-assemblies, and in some cases, finished products, to India. Regardless of the reasons, such a move, especially without any prior notice, can be counterproductive.”
Mohindroo told FE, “The disruption began with the Chennai airport on Monday night and has spread to several ports and airports across the country. As you are aware that the industry is just about limping back to normalcy after nearly three months, both with regard to production and sales, but equally important, exports from India. With the import disruption at customs across the country which was both unannounced and opaque, there will be further delays for companies, both Indian and foreign, to generate revenues and return to business as usual. This will also impact taxes – both basic customs duty and GST.”
“It is very difficult to comment on this issue at this point. But considering industry is emerging out of a lockdown and piecing itself together, a knee jerk reaction is best avoided. We must take well thought out measures which do not lead to any major disruption in the value chain,” Vinnie Mehta, director general, Automotive Component Manufacturers of India (Acma), said.
According to Mait, CEO, George Paul, “We understand that a step is being taken to do a thorough inspection of containers to safeguard India’s interests. If such a measure is being taken, as industry we suggest that importers with AEO status, also called green channel importers, be excluded from the same as they are entities validated by the government. We wish to emphasise that as citizens of India we will stand by decisions that the government may deem fit to take”.