New Delhi is delaying the clearance of Chinese imports a week after 20 of its soldiers were killed in a border clash with People’s Liberation Army troops.
The cargo hold-up at India’s ports and airports has infuriated business groups. They complained that the delays were disrupting operations of international companies, especially manufacturers of mobile phones and other telecoms equipment dependent on imported Chinese components.
The India Cellular and Electronics Association, which represents western companies such as Apple and Nokia as well as Chinese groups Oppo, Xiaomi and Vivo, said customs agents were physically inspecting individual shipments. Until this week, many of those shipments were eligible for fast-track clearance.
The organisation said the bottleneck was a blow to just-in-time manufacturers still struggling to recover from the impact of India’s coronavirus lockdown.
“All China-origin imports of the electronics industry have come under adverse action by customs at the ports without prior warning,” Pankaj Mohindroo, the ICEA chairman wrote in a letter to Nirmala Sitharaman, the finance minister. “The logistics of seamless movement is in total disarray.”
Even some goods already cleared and loaded on to trucks for transport to warehouses were stopped from leaving the ports and recalled for further examination, the ICEA letter said. “Such a move, without any prior notice, can be counter productive.”
New Delhi does not appear to have issued any formal order stipulating that all Chinese imports should be physically inspected. Rajesh Malhotra, a finance ministry spokesman, told the Financial Times that he had “no information as of now on this issue”.
However, a large western tech company said businesses were facing hold-ups “at different levels at different ports” for imports of finished products and components for assembly of goods in India.
“There is no stoppage per say — a good analogy would be a traffic jam,” said the official, requesting that neither he nor his company be identified “The degree of difficulty has gone up. This is sabre-rattling . . . At the end of the day, it’s self-defeating.”
Following last week’s fatal brawl on the Sino-Indian border, officials indicated that New Delhi would seek to retaliate against Beijing economically, although no formal measures were announced.
The moves to delay Chinese imports began on Monday when the Chennai Customs Brokers’ Association warned its members to expect delays clearing customs. It cited an “internal instruction” from the customs department to shippers “to hold all consignments which are originated in China”.
The association said that even consignments normally eligible for automatic fast-track clearance were to be held and subjected to physical inspection. It said the instructions had been quietly issued to ports and airports across the country.
India runs a significant trade deficit with China, from which it imported $65bn worth of goods last year, including critical raw materials for its pharmaceutical industry, electronics equipment and components, and a wide range of consumers goods.
The ICEA said that opening and physically inspecting all consignments would lead to goods being dirtied and damaged, causing significant losses for companies and a shortage of critical equipment in the market.
It also warned that the abrupt shift in customs policies would spook investors just as New Delhi was trying to attract greater investment and promote itself as an alternative manufacturing base to China.
“They need to have confidence that the global logistics machinery will function without disruption in India,” Mr Mohindroo wrote.