These firms have now written to the government to seek certification for manufacturing units in other Asian nations, a senior government official said. But the government is reluctant to certify factories located even in some Asean countries with which it has a free-trade pact.
Govt fears ‘backdoor entry’
These include countries like Thailand and Vietnam, as the government fears companies may import Chinese products from these locations as a “backdoor entry” without much value-addition there, four industry and government sources said.
As per the QCO rules, products notified under such orders and their components need to be manufactured in BIS-certified factories whether located in India and abroad. Each factory needs to be individually certified even if they are owned by the same manufacturer.
Currently, over 500 products including footwear, toys and air conditioners are under QCO cover, up from just 106 products prior to 2014.
A Carrier Midea India spokesperson said the company’s finished products including window ACs, split ACs and ducted ACs along with individual components such as compressors and heat exchangers are in compliance with BIS norms and meet the specified standards.”However, in the case of VRF products, BIS is necessarily required for hermetic compressors,” the person said, adding that such compressors are not made in India at present.”So far, the VRF product segment contribution is quite low in the overall category, resulting in low volumes,” the person said. “Therefore, the manufacturing facilities for this type of compressors are currently not available in India, which is an industry wide concern.”
Emails to Nike and Mitsubishi remained unanswered till press time Wednesday.
Nike has requested the government to certify the factories of its suppliers in Indonesia and Vietnam so that it can continue to import from there, as per a letter written on November 20.
Nike has asked for “timely certification of overseas factories in Vietnam and Indonesia (26 suppliers to Nike and Converse have submitted their applications since May 2023)”.
ET has seen a copy of the letter.
A senior executive with a leading global AC manufacturer said the BIS team is not very forthcoming to go to China to certify factories there.
Earlier, BIS used to complete the certification process through videoconferencing, but now they are not doing it for Chinese vendors, he said on the condition of anonymity.
“Even factories in some Asean nations such as Thailand and Vietnam are not getting easily certified,” he said. “The government wants to shift all production to India, which takes time. For instance, domestic capacity for AC compressors as of now is around 3.5-4 million units whereas the market size for ACs is 11-12 million units.”
China is the largest supplier for AC compressors apart from other components like copper tubes.
India’s imports in the first half of the current fiscal (April-September 2023) dropped marginally to $50.5 billion from $52.4 billion in the corresponding period last year.
PLI benefits
The government is much more liberal in issuing BIS certificates to AC brands that have committed to set up plants for local production of compressors under the production-linked incentive (PLI) scheme, another industry executive said.
Such brands have received the BIS approval for their vendors, including those located in China, he said. “The government wants a clear commitment on domestic capacity building before certifying the overseas vendors,” he said.
A senior government official said there are plans to expand the mandatory quality standard certification to include 1,500-2,000 products, ranging from toys to electronic items, in the next 2-3 years.
The government recently notified 217 products that will come under QCO over the next couple of years. They include sanitary diapers, bed sheets, flasks, door handles, bottled water dispensers, containers for food storage, cotton bales, refrigerators and automotive wheel rims besides industrial products like aluminium ingots billets and wire bars, power converters for use in photovoltaic power systems and poly vinyl chloride geomembranes.
Stressing the government’s intent to strengthen quality standards in the country, union minister Piyush Goyal had earlier said, “India needs to become a quality-conscious nation and adopt quality as an integral part of the process in preparing the foundation of becoming a developed nation by 2047. Until India becomes a leader in quality, it will not be able to become a developed economy.”
