Rising India-China tension impacts custom clearance with imports piled up at ports

Last updated on February 14th, 2023 at 11:31 am

With the rising tensions between India and China, custom clearances for the goods imported from Beijing have been taking longer to pass as Indian custom officers have started manual inspection of each and every consignment after Intelligence promoted an alert. The move has been criticised for it has slowed down the Indian economy, which has been struggling to lift itself up after being hit by the coronavirus pandemic shutdown.

With the aim to teach China a lesson, for its intrusion and occupation of Indian territory (a contested matter) Indian politicians and other leaders promoted the campaign of banning Chinese goods. The move started to impact adversely the Make-In-India initiative, India’s economic growth and jobs, as highlighted by the US-India Business Council (USIBC) on Thursday. USIBC complained about the sudden increase in custom vigilance, without any prior notice which slowed the process of availing imports like pharmaceuticals products, medical devices, electronics, telecommunications equipment and raw materials for goods. It impacted country’s own trade and customer demand.

USIBC said in a statement, “We have inquired with Government of India officials about the cause of these delays and shared the negative impact they’re likely to have on economic growth and job creation during this fragile recovery period.”

The statement further read, “We understand the need to protect national security. However, India’s goal of becoming a self-reliant hub for global manufacturing and integrating into global value chains depends upon a foundation of transparent and predictable policy processes.”

Government sources responding to the delays caused by custom clearances said that government did not issued any formal notice for country specific goods inspection but has been aware of the development. “No orders, verbal or written, have been issued to any port by customs or by the Central Board of Indirect Taxes & Customs (CBIC) to bar or not to accept containers from China. If in some cases, some containers are held up then they are for the intelligence input and on the basis of risk assessment, as a routine exercise,” a government official said.

Custom action by Indian authorities at Mumbai and Chennai port triggered a similar response from the Chinese government as Indian Exporters body FIEO raised the issue of retaliatory action by the neighbouring country, which held up their consignments at Hong Kong and Chinese ports. FIEO urged Commerce Secretary to discuss the matter with the Central Board of Indirect Taxes and Customs (CBIC) as the move was jeopardising Indian trading community for 100 per cent checking of Chinese consignments at Indian ports.

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India’s imports from China make up about 14% of its entire import. As per the last year’s figures between April 2019-February 2020, India imported Chinese goods worth USD 62.4 billion, while exported goods worth USD 15.5 billion to China. Experts said the main issue which disappointed Indian industry was not government’s move towards localisation but lack of communication about change in the government policy. “The importers need to be aware of the policy decision, if any, on possible port of import and clearance procedures since a number of these products are being imported from China in Chennai port which caters to a large catchment of manufacturing hubs,” said Bipin Sapra, partner, EY told Economic Times.