Even after more than a year when the government decided to bring in stricter and comprehensive product standards for at least 371 key imports, the Bureau of Indian Standards (BIS) has till now finalised standards for only a few items such as toys. The move was aimed at reining in runaway imports, mostly from China, that raised the merchandise trade deficit.
Last year in January, the Commerce Department had pushed for strict product standards for import items such as processed food, textiles, leather, toys, furniture, plastic goods, manufactured mainly by Micro Small and Medium Enterprises (MSMEs). Items like television, air-conditioners, and refrigerators were also on the list.
"The 371 imports cost nearly $127 billion or 26 percent of India’s annual imports back then. After considering a mandatory licensing regime for imports, tariff hikes and sectoral restrictions followed by anti dumping investigations, the creation of stricter product standards was decided upon as the easiest and least controversial measure,"a senior official in the know said, requesting anonymity.
The products were spread across a wide chunk of India's import categories and came under a host of ministries. As a result, a specific inter-ministerial joint committee had been created involving stakeholders from the Department of Chemicals and Petrochemicals, the Department of Heavy Industries, the IT Ministry, the Department for Promotion of Industry and Internal, the Steel Ministry and the Telecom Department.
However, sources say that despite a large number of meetings conducted in early 2020, the committee has been unable to accelerate the process. "Eighteen core group meetings have been held by officials belonging to a cross section of ministries on the matter. But BIS continues to handle a massive workload, not at all commensurate with the number of trained officers and academic, research staff needed to establish product standards for so many items within such a time frame. Instead a few categories have been focused upon, such as toys,"a BIS official said under conditions of anonymity.
Ever since taking charge of the Consumer Affairs Ministry, Commerce and Industry Minster Piyush Goyal has directed the BIS to go in for massive expansion and modernisation of testing labs so that entrepreneurs don't have to travel far to get the testing and certification of standards. On Monday, Goyal asked the BIS to sharply reduce the official fee charged for testing of standards. Goyal said this will encourage small businesses to get their products certified and also encourage the ease of doing business.
Establishing clear product standards were part of the larger aim of putting in place non-tariff barriers to imports, that incentivised merchants and manufacturers to source locally. With trade deficit being a major issue in the first few years of the Narendra Modi-government, India has hiked duties on over 3,500 tariff lines since 2014.
As a result, the Commerce Department has been hesitant to raise import duties, fearing higher prices will hurt manufacturers and exporters who rely on foreign inputs and are facing a liquidity crisis. Officials have also pointed out that more research is needed to see if domestic capabilities can be quickly ramped up or whether Indian importers can source goods from other nations if imports from China are suddenly restricted.
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