New Standards for Indian OEMs

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For the first time in history, electronic products, whether imported or manufactured domestically, cannot be sold in the country without BIS certification. Manufacturers of these products have to first register the products with the BIS and re-register every two years.

India has taken this strict measure to curb the grey market and ensure consumers are not saddled with sub-standard goods. The grey market accounts for nearly 40 percent of the sales in the Indian electronics market. Thus the certification is a step to safeguard consumer safety as well as regulate unfair practices including low pricing and unbranded, unreliable products.

The Department of Electronics and Information Technology (DeitY) has issued the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order, 2012, under which manufacture, storage for sale, import, sale, or distribution of goods that do not conform to specified standards and that do not display the self-certification “Self declaration: Conforming to IS” after registration with the BIS is prohibited. The order does not apply to products meant for export.

CIOs of OEMs need to familiarize themselves with the new mandate and ensure compliance, for the government intends to announce an additional list of product categories soon, including mobile phones.

It is expected that the electronics market in India will grow at 22 percent annually, which is seven times the global rate. Telecom equipment and handsets, IT systems and hardware, consumer electronics, and industry electronics are the most promising segments on the horizon with the demand predicted to explode to $400 billion by 2020. At $28 billion, imports filled 65 percent of the demand in 2011.

Of particular importance are rules that stipulate that:

1. Sub-standard or defective goods will be deformed and disposed of as scrap.
2. Samples may have to be provided as and when called for by authorities to ensure compliance.
3. Documents and other material can be inspected by authorities to ensure compliance.
4. Authorities can enter premises, search, and seize goods if non-compliance is suspected.
5. Series approval may be granted for goods of different sizes, ratings, and variety, based on sample testing or testing of representative models. Such samples of product or product series may be drawn from the manufacturing unit or the market -- and at random. The BIS may also draw samples in addition to this.
6. The authorities may issue directions to manufacturers under the Bureau of Indian Standards Act and every manufacturer has to comply.
7. Applications for registration with the BIS should be made by overseas manufacturers after setting up a liaison/branch office in India, and should enclose test reports, self-evaluation, and declaration.

As of now, the Standardization Testing and Quality Certification Directorate (STQC) under the Ministry of Information Technology has applied for approval to the BIS to conduct the tests. While the cost of testing is to be borne by manufacturers, the process will be sought to be made transparent by publicizing on a website.

There are provisions for suspension, renewal, cancellation, and lapse of registration as well as a procedure to appeal to the Central government against BIS orders. Naturally, the sweeping powers have caused eyebrows to raise and escalated worries over implementation. But the government has set its sights on the promising electronic system design and manufacturing sector(ESDM) and is unveiling a slew of policy initiatives, discussed by E2 India earlier.

OEMs looking to do business need to get familiar with the regulations, and just as important begin the process with the government. CIOs, as usual, will likely take the brunt of more compliance issues. However, the emphasis on excluding grey market goods may help manufacturers in the end.