Embargo on Chinese goods is hitting US manufacturers in India, claim supply chain disruptions

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Published: June 26, 2020 10:13 AM

India’s border stand-off with China may disrupt the supply chains of U.S. companies based in the south Asian nation.

So while the China-Bangaldesh trade is already heavily tilted in favour of Beijing, New Delhi’s trade ties with Dhaka are much more balanced.India’s trade with the U.S. was worth $87.95 billion in the year ended March 2019, making it the country’s largest partner.

By Archana Chaudhary

India’s border stand-off with China may disrupt the supply chains of U.S. companies based in the south Asian nation. The decision by customs officials to abruptly halt clearances of industrial consignments coming in from China at major Indian ports and airports has raised concerns among U.S. manufacturers based in the country, according to a letter written to India’s Department for Promotion of Industry and Internal Trade.

“We are concerned about the repercussions an unanticipated embargo on the import of goods from neighboring countries will have on the supply chain and manufacturing,” said Mukesh Aghi, president of the U.S. India Strategic Partnership Forum in the letter sent to Guruprasad Mohapatra, secretary of the government department.

Lack of information about what consignments may be held up threatens business continuity and disrupts manufacturing operations, the letter noted. India’s trade with the U.S. was worth $87.95 billion in the year ended March 2019, making it the country’s largest partner. Yet China remains the south Asian nation’s biggest global supplier, and Beijing has a trade surplus of about $50 billion with New Delhi.

“There’s no formal order from India’s Directorate General of Foreign Trade at the moment on halting any imports,” said Yogesh Baweja, a spokesman for the commerce ministry, adding the problems may have been caused by procedural delays at customs. Rajesh Malhotra, spokesman for the finance ministry, declined to comment.

India has stepped up import curbs after nearly two months of simmering border tensions with China in the high Himalayas escalated sharply on June 15, resulting in the deaths of 20 Indian soldiers. India’s federal government has asked companies to list purchases from China and flag those critical to operations so it can identify non-essential imports that can be substituted with local products, the Economic Times reported.

The Trade Ministry is also evaluating non-tariff measures including inspections, product testing and enhanced quality certification requirements to check Chinese imports to avoid falling foul of World Trade Organization rules. The State-run Bureau of Indian Standards is finalizing tougher norms for at least 370 products to ensure items that can be locally produced aren’t imported and talks are on to raise import duties on certain products.

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