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India borrows quality certification card for Chinese products

New Delhi is using quality control orders to “slowly” certify products made in Chinese factories, putting pressure on multinationals that rely on them.

The Indian government’s ultimate aim is to require them to reduce their dependence on Chinese imports and instead produce in India.

Quality control orders are mandatory requirements by the central government of India for certain specific products or product categories to comply with Indian standards, and the relevant authorities will include the product in the mandatory certification of the Bureau of Indian Standards.

According to the quality control order, the relevant products and their components need to be manufactured in a factory certified by the Bureau of Indian Standards, whether the factory is in the country or abroad. Each plant needs to be individually certified, even if they belong to the same manufacturer. Quality control orders now cover more than 500 products, including footwear, toys and air conditioners, up from 106 before 2014.

 

India’s “Business Standard” reported that Nike, Mitsubishi and air conditioning manufacturer Carrier and other companies in China supplier factories are difficult to obtain Indian Bureau of Standards certification. The companies have now written to the Indian government seeking certification for their manufacturing plants in other Asian countries, according to senior government officials. However, the Indian government remains hesitant because of concerns that companies may import Chinese goods through “back doors” such as Vietnam and Thailand, even though these countries have signed free trade agreements with India.

According to a letter dated November 20, Nike has asked the Indian government for timely certification of its factories in Vietnam and Indonesia. Since May 2023, 26 Nike and Converse suppliers have submitted applications. Carrier, for its part, said its finished products, as well as components such as compressors and heat exchangers, meet the standards of the Bureau of Indian Standards. Some components have to be approved by the Bureau of Indian Standards as there is currently no production in India.

A senior executive of an air conditioning manufacturer said that the Bureau of Indian Standards team was reluctant to travel to China to certify factories, and some ASEAN countries such as Thailand and Vietnam were not easy to obtain certification, and the Indian government wanted to shift all production to India.

However, it takes time, such as the current annual production capacity of domestic air conditioning compressors in India 3.5 million to 4 million units, the air conditioning market size of 11 million to 12 million units. China is now the world’s largest supplier of air conditioning compressors. Another industry executive said the Indian government had been much more lenient in issuing quality certificates to air conditioning brands that promised to build local factories to make compressors.

 

Such restrictions in India are non-tariff barriers, the main purpose of which is to support the domestic manufacturing industry, while reducing dependence on Chinese products and reversing the trade deficit with China.

Nor would it attract much attention at a time when anti-globalisation moves are clearly on the rise in the US and the West. Liu Xiaoxue said that India attracts foreign investment in the manufacturing industry, cheap labor and a large market are its two major advantages.

But there are also uncertainties, including how high non-tariff barriers can be built, how long they can hold out in the face of domestic consumer and retailer discontent, building their own manufacturing capacity, and the challenges of other aspiring manufacturing countries, such as Vietnam, Indonesia, and Bangladesh, in addition to China.