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Indian exports to China face delays after Chinese-origin imports into India get held up

economy | IST

Indian exports to China face delays after Chinese-origin imports into India get held up

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Following "unofficial" orders at commissionerates across the country to withhold China-origin consignments for a 100 percent examination, shipments continue to be stuck at sea for the seventh day. Meanwhile, Indian imports into China are also facing delays.

Following "unofficial" orders at commissionerates across the country to withhold China-origin consignments for a 100 percent examination, shipments continue to be stuck at sea for the seventh day.

There is still no move on actually conducting the examination and subsequent clearance of these stranded China-origin containers, worsening the congestion at ports, which were already struggling with month-long delays in import clearances during the COVID-19 lockdown, sources in the know told CNBC-TV18.
Customs officials, too, are not deployed to their full strength at ports in the light of the COVID-19 outbreak, potentially causing more delays in transit and clearance times.
Import releases down to a crawl
While there is still no official order from the finance or commerce ministry on the matter, customs brokerages across commissionerates continue to confront a go-slow situation.
A minuscule number of shipments, which are getting cleared at this time - mainly belonging to tech and pharma giants - were ones that arrived in India largely through charter flights and have already been in the country for the last 20-25 days, sources said.
Consignments for these sectors, if faced with prolonged delays and item-level exams can cause severe disruptions in production activity, and also harm the shipment itself. They also rack up penalties. After several industry representations, some of these containers which arrived over 20 days ago are being accorded priority.
China retaliates
In a tit-for-tat move, Indian exporters are now experiencing similar delays on their shipments at ports in China and Hong Kong.
According to sources, China has ordered similar non-official go-slow orders for Indian-origin consignments on their shores, leading to exporters incurring hefty penalties.
Chinese customs officials are looking to conduct thorough physical examinations of India-origin containers, following the delays in clearances in India on China-origin imports, the sources added.
Cascading effect in India
Logistics service providers are negotiating disputes worth crores on demurrages, penalties, ground rent, warehouse charges, as importers raise alarm.
DHL on Thursday had announced it was temporarily suspending picking up India-bound import shipments from China for a period of ten days. Other freight forwarding players including FedEx and UBS, sources say, have made similar decisions due to the congestion and uncertainty at Indian clearing ports.
With the slowdown accruing hidden charges, importers will likely pass on the cost to customers and commodity prices could go up.
A majority of Chinese shipments arriving in India are pre-paid, which means importers, especially small and medium players have their capital blocked in these consignments.
The impact of the delays is being felt across sectors, from tech giants and life sciences and healthcare, to engineering and manufacturing players, tier-1 suppliers of auto components and consumer goods to some extent.
Sources in FIEO told CNBC-TV18 that some Indian exporters were facing delays in China earlier in the week. There were indications India may retaliate but no serious moves have been made by the government so far.
FIEO has written to the government seeking clarification. It seeks the government to issue denial in case there are no official instructions. It says that there may be retaliation from China due to actions resulting from a lack of clarity from the Indian government.
Sources said that there were some attempts to open up Indian containers in Hong Kong and Shanghai. China's response has been more mature than India's in this matter, they added.
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