Caixin
Jul 01, 2020 03:42 AM
ECONOMY

India Holds Up Imports From China Following Border Clash

Container trucks sit parked near the Jawaharlal Nehru Port. Photo: Bloomberg
Container trucks sit parked near the Jawaharlal Nehru Port. Photo: Bloomberg

(Bloomberg) — Imports from China have been piling up at Indian ports pending government clearance, causing concern that economic fallout from a recent border confrontation will disrupt supply chains.

From active pharmaceutical ingredients that go into the world’s most-consumed drugs to the innards of popular mobile phones, raw materials purchased from Chinese suppliers feed the finished products of Indian companies. These consignments are being delayed, and companies aren’t sure why.

“Customs authorities have not been clearing consignments coming from China, and they haven’t been offering any reasons,” Dinesh Dua, chairman of India’s Pharmaceutical Export Promotion Council, said by phone. “It has been five days now. We have no source apart from China.”

Dua, who’s also chief executive officer of Nectar Lifesciences Ltd., said he wrote to the ministries responsible for pharmaceuticals and trade requesting help as companies are spending about 350,000 rupees ($4,630) a day in demurrage charges. Electronics manufacturers voice similar concerns along with anxiety about how they will run their factories, only recently reopened after India’s lockdown to contain the coronavirus.

“Five consignments of mine are stuck,” said Sudhir Hasija, chairman and founder of Karbonn Mobiles, which builds smartphones, chargers and set-top boxes. “The government collected customs duty and GST on them. A hundred percent of the inspections are done. Now I’m told they are waiting for release instructions, from whom I don’t know. I haven’t received any communication.”

Businesses say they worry that they may become casualties in a brewing trade war between the Asian giants sparked by a border clash that killed 20 Indian soldiers and left an undisclosed number of Chinese dead. India plans to impose stringent quality control measures and higher tariffs on imports from China, people with the knowledge of the matter said. India banned 59 Chinese apps Monday, citing threats to its sovereignty and security.

Stopping imports from China at domestic ports will lead to losses for Indian businesses that placed orders before the border clashes, Nitin Gadkari, Indian minister for Micro Small and Medium Enterprises, told Quintillion Media Sunday. Gadkari said his ministry is actively working with the finance and commerce ministries to resolve the issue.

Yogesh Baweja, a spokesman for the commerce ministry, declined to comment. Rajesh Malhotra, who represents India’s Finance Ministry, didn’t answer a call outside office hours Monday in New Delhi.

At least six companies across India have been affected by the delays, according to Daara Patel, secretary general of the Indian Drug Manufacturers Association, which represents small and medium-sized Indian pharmaceutical manufacturers. Companies are “quite anxious and concerned about the attitude of the clearing agencies across the country,” he said.

Though drugmakers typically have stores of active pharmaceutical ingredients to last as long as three months, the delays could particularly affect antibiotics, given Indian factories’ dependence on Chinese raw materials.

The Society of Indian Automobile Manufacturers warned in a statement that congestion at ports could hurt manufacturers. Karbonn’s Hasija said freight forwarders are refusing to lift more material from China because they don’t have space to store the shipments.

Pankaj Mohindroo, chairman of the India Cellular and Electronics Association, which represents companies such as Apple Inc. and Micromax Informatics Ltd., said the industry body is in talks with the government to resolve the situation.

“We have been assured that the government does not want any disruption in these trying times,” he said. “All actions will be taken in the interest of the industry and nation.”


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