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India proposes new electronics standards as trade wars shift from import duties

Indian government has proposed the creation of new standards for electronics industry in India to target imported electronics, that might affect importing of devices such as iPad here, reports The Economic Times.

This announcement seems to be a response to mega trade treaties such as Trans Pacific Partnership (TPP), the Trans Atlantic Trade and Investment Partnership (TTIP) and the Regional Comprehensive Economic Partnership (RCEP), that eliminates import duties and other tariffs on imported electronics.

Rajeev Kher, Secretary, Department of Commerce, Government of India meanwhile said recently that the emphasis is now shifting to creation of rules, regulations and standards. This is a shift from the tariff-based protectionist measures used by countries, to using technicalities for controlling what goods are imported.

Issues with the proposal

– As per the new proposal, electronics goods that are imported and sold in India will need to comply with Bureau of Indian Standard and get certified by them starting July 1. Many US-based companies are of the opinion that India is rushing it out, though the date has been extended twice already.

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– There is also criticism that BIS does not have enough testing centres with the required facilities as of now. It is worth noting that the organisation has more 140 recognised laboratories (pdf) for testing, apart from 24 specialised centres (pdf), but it’s not clear how many of these deal with electronics exclusively.

– The US trade bodies believe that if the July 1 deadline is not deferred it could affect their supply chains in the country. This is a valid concern since products already take a while to reach the market, due to delays by Customs.

Do note that Apple’s tablets and computers are already certified by BIS. As a matter of fact, tablets made by most companies including Samsung and even Indian companies like Lava receive certification from BIS. It’s not clear if iPhone or any other mobile device that is imported into the country is submitted to BIC for certification. If it is, the organisation has not revealed the details on its website. It is also not clear why ET thinks the proposal will affect import of Apple devices in the country.

It is not clear if government will use these standards to get more companies to set up manufacturing or assembly centres in India under the National Electronics Policy.

Will this affect Indian phone companies?

Companies like Micromax, Karbonn and Lava manufacture phones in China and sell it here at really affordable prices. However the failure rate of these devices are very high and there is high chance that you might have to approach a service centre within the first year (from personal experience). If BIS puts in place tight regulations to reduce such failures, it could in effect increase the prices of phones offered by these companies. That said, Motorola has been successfully selling high quality phones in India at a very reasonable price so high quality standards may not necessarily affect pricing.

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Is this even about importing electronics?

The impact of this policy on imported electronics in India could just be the red herring. The industry that will be most affected by this shift from duties to standards will be the Indian medical industry. Generic drugs created by medical companies here have been under the scanner for poor standards maintained in the testing phase. Countries that couldn’t earlier block drugs easily can use these standards to stop Indian companies even before the drug is introduced into the market.

The other group that will be affected are companies that export electronics from India. Ajit Seth, Cabinet Secretary, Government of India said recently that a law needs to be in place to improve the standards here. He also said that the country needs to take a leading role in the identification and development of standards to improve the competitiveness of Indian industry and its export prospects.

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