Quality Certification Is Technically a Trade Barrier

Sudha Nagaraj Bharadwaj, Journalist | 4/25/2014 | 15 comments

Sudha Nagaraj Bharadwaj
The much-dreaded April 4 deadline for certification of imported electronic products in India has passed. The Department of Electronics and Information Technology (DeitY) had mandated that all imported electronic goods should obtain a clearance from the Bureau of Indian Standards (BIS). That was a year ago, as E2 India reported.

However the compliance deadline was pushed back many times as the industry exerted pressure on the government. E2 India also tracked the tussle between the government and the industry. While the Indian government was intent on cracking down on the gray market, the industry resisted cumbersome certification procedures that they said threatened sales of 15 product categories ranging from laptops to microwave ovens.

True, many companies have rushed to comply -- Samsung Electronics, LG Electronics, Dell, Hewlett-Packard, Sony, and so on -- which means the BIS should be on its toes clearing registration requests and granting certifications for a number of brands, right? Not really -- only about 781 manufacturers have completed registrations. Many of the requests of registrations are still pending and many even face the risk of rejection for not completing all the actions required under the process. As a result, the registration process is tardy.

While the industry is delaying total compliance with the hope of getting extensions, the government is also extracting its pound of flesh by adding new categories of products or spelling out additional norms!

For instance, on March 25, the BIS issued a fresh notification that stipulated new guidelines for labeling of products. Instead of stickers -- which were earlier the approved method of labeling -- the government now wants manufacturers to screen-print, emboss, or engrave labels on products and packaging material. The revised labeling rules also specify that the font size of the letters should be 12-pt or one fourth the size of the brand name or whichever is lower. Where labeling is done in one fourth the size of the font used for the brand name, the font size should not be below 6-pt.

Every time there is a change in norms, compliance is challenged. For instance, in the case of the change to labeling guidelines, the fact that the product size may pose a problem to packaging and labeling requirements has not crossed the minds of policy-makers. For manufacturers of tablets and phones, new product launches will require new production lines to comply with BIS guidelines that mandate embossing/engraving -- a practice not followed anywhere else in the world. With product models changing rapidly, the use of stickers has become more prevalent. While this is the practice globally, OEMs will need to plan for retooling that allows embossing and engraving their product lines for the Indian market alone. Also, metal plating or engraving is difficult on such products.

Led by industry body MAIT, some players including Sony, Lenovo, Panasonic, and Videocon have appealed to the Indian government to rethink the norms. With new models of their products unable to comply with the labeling norms and not reaching consumers here, there will be an artificial escalation of prices, they have warned.

The 2014 Technical Barriers to Trade report of the US Trade Representative has also objected to the mandatory testing and registration of imported electronic goods in India. It has pointed out that the U.S. electronic exports currently sold in India are fully certified in internationally recognized laboratories, and that the government of India has never articulated how such a domestic certification requirement advances India's legitimate public safety objectives.

"Notwithstanding ongoing efforts by global industry to engage the government of India to resolve concerns and ambiguities in the policy without undermining those objectives, the Order entered into force in January 2014," it said.

"Although U.S. industry would ultimately like to see the entire policy repealed, an important first step is to seek an exemption for Highly Specialized Equipment (HSE), including servers, storage, printing machines, and IT products that are installed, operated, and maintained by professionals who are trained to manage the product's inherent safety risks," the report added.

So CIOs, you can expect to see a lot of action on this front in coming days. What impact do you think these rules will have on import/export of electronics? Let us know in the comments below.

View Comments: Newest First | Oldest First | Threaded View
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eethtworkz   Quality Certification Is Technically a Trade Barrier   5/14/2014 10:49:27 AM
Re: in the minds of Indian policy makers
stotheco,

I have very high hopes too.

Lets not forget that we are talking about over 1.2 Billion people and their Lives here.

Growth for India means growth and Progress for the Entire World today.
stotheco   Quality Certification Is Technically a Trade Barrier   5/14/2014 1:25:09 AM
Re: in the minds of Indian policy makers
@Nasimon, agreed. Quality certification is both a trade barrier but something that a lot of businesses are in favor of, considering that it is also for their own good quality-wise.
stotheco   Quality Certification Is Technically a Trade Barrier   5/14/2014 1:24:31 AM
Re: in the minds of Indian policy makers
It's unfortunate but so many things are controlled by not just the government as a whole, but the individual politicians and policy makers who may at times, act on their own interests or those of others they are in favor of.

Hopefully whoever wins in the elections has the good of India in mind.
SunitaT   Quality Certification Is Technically a Trade Barrier   4/30/2014 1:30:53 PM
Re: In the minds of Indian policy makers
To some extent I agree with the information your trying to bring out in this article. I think quality certification is very important in trade but what should be considered is the manner in which it will affect the economy at large with respect to how traders are responding towards it. In the situation of India, I think that these policy makers are over doing it following the labeling conditions they require. Generally these rules and regulations are important in reducing dumping rate and also enabling Indian government to curtail imports to help them maintain a perfect balance of payment.
SunitaT   Quality Certification Is Technically a Trade Barrier   4/29/2014 1:54:22 PM
Re : Quality Certification Is Technically a Trade Barrier
It is all very well for India to try and protect its people from dumping and other malpractices that would compromise the quality of products that they get but, in my opinion, the current policy makers may be stretching this a little too far. With respect to IT, India is emerging as a major player and the policy makers should be trying to help boost that growth even further. Instead, their regulations are stifling that growth and the result will be simple; giant companies such as Sony and Samsung will, if the rules are not slackened, comply and meet all the requirements since they have the capital required. But they will have a bigger share of the market since local and smaller companies will be locked out and they can hike prices by creating artificial shortages. In the end, it is the Indian investors and consumers that will lose out if the regulations remain this stringent or keep getting tougher.
eethtworkz   Quality Certification Is Technically a Trade Barrier   4/28/2014 10:25:26 AM
Re: in the minds of Indian policy makers
Nasimson,

Yes you are quite right in saying that is a simpler and more Direct way of Getting more Manufacturing Done at home;Unfortunately there are serious obstacles involved in that.

One is the fact that India is a signatory to the WTO and so can't really go around imposing Anti-Dumping Duties & Such randomly.You have to follow the WTO Dispute Resolution Mechanism for that(which is Time Consuming with no Real Guarantee of Victory).

The Second is the perception it will create Globally that India is not really open for Business(which will hamper FDI Flows into India as well).Sentiment as they say matters immensely in the World of Finance.

In contrast this is a Low-Cost Indirect way to Quietly impose Additional Costs on Overseas Manufacturers thereby forcing them to Manufacture Domestically instead.

If its complex;I agree.But then nobody said the world was a Simple Place.

LOL!!!

 
eethtworkz   Quality Certification Is Technically a Trade Barrier   4/28/2014 10:19:07 AM
Re: in the minds of Indian policy makers
Nasimson,

I would rather not comment on Politics especially in a boisterous Multi-Party Democracy like India.

Life& Politics(as they say) is full of Glorious Uncertainities!

While the perspective you share is the predominant Media Narrative today;Unless the said Government does assume Power(that too with a Full Majority in place) it will be very difficult to implement any change or reform.

So its better to wait patiently till the End of May(by when the Next Government will be formed and started getting involved in the Business of Governance) before one decides which way things will go from here.

 
nasimson   Quality Certification Is Technically a Trade Barrier   4/28/2014 9:46:59 AM
Re: in the minds of Indian policy makers
@eethtworkz:

Thank you for correcting my facts. Appreciate it.

> If you look at this Rule through the Guise of Jobs and Economics it
> becomes a lot more clearer.
> The Goal is encourage more Electronics Manufacturing to move towards India.

IMHO the job of the certification is not to do that. The certification is aimed at quality, standardization, safety, interoperatbility etc. At best this would bring the the labeling & packaging process to India not the manufacturing itself.

If the goal is to move manufacturing to home, then there should be higher import taxes, tax holidays/subsidies for local manufacturers, etc. 
nasimson   Quality Certification Is Technically a Trade Barrier   4/28/2014 9:40:29 AM
Re: in the minds of Indian policy makers
@ eethtworkz:

Actually matters can change drastically depending on who comes to power. If BJP does, then I expect to become much more relaxed. If congress continues, this would continue to be the way it is going!
eethtworkz   Quality Certification Is Technically a Trade Barrier   4/27/2014 12:03:57 PM
Re: in the minds of Indian policy makers
Zaius,

India is currently in Election Season(with the Results out in the Middle of May);once that happens and a New Government is in place at the Centre a lot of these Rules& Regulations will be relooked at again from a Fresh Angle.

Just not sure if the New Government will do things very differently going ahead.

 
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