Stoppage of China-origin IT consignments hits business

The ongoing tension between India and China amid the coronavirus lockdown has come at a considerable cost to the economy

Jun 30, 2020

The ongoing tension between India and China amid the coronavirus lockdown has come at a considerable cost to the economy. The aftermath of the clash between the armed forces of both the countries in Ladakh a fortnight ago has resulted in an unofficial embargo over the trade of electronic goods from China.

Since the last 15 days, right after the standoff, customs authorities have withheld China-origin consignments at the ports for a 100 per cent examination before issuing any clearances. The move has forced the importers to pay additionally for the demurrage charges at the ports resulting in a rise in prices of China-imported electronic items up to 50 per cent in the market.

Traders at Nehru Place in south Delhi, the most prominent electronic and IT goods market in India, have increased the prices of electronic items imported from China up to 50 percent. The traders listed delay in clearance of their consignments, demurrage charges, and emptying stock behind the rise in prices.

"We are forced to do so. Our consignments are stuck at the ports for days. We are told that the consignments would be cleared only after a 100 percent examination. Since the consignments are not cleared, we have to pay hefty demurrage charged daily by the port authorities. This additional expense we are forced to bear has resulted in a hike in the prices of the goods," said Munish Sharma, an importer of electronics and computer peripheral devices in Nehru Place.

Sharma said that earlier, the authorities used to clear the consignments from China after examining 2 to 3 percent of the goods they carry. "Now, they are examining every item before the clearance," he said.

The importers also said that the customs authorities had indicated that there would be delays in clearing Chinese shipments. However, the authorities did not cite any reason behind it. "My three consignments are stuck at Chennai port for 12 days. When I contacted the port authority, I was told that my consignments are being checked. Earlier, it used to take only 2-3 days. Now I have to incur demurrages amounting tens of thousands daily due to this delay," an importer from the Nehru Place market told IANS on condition of anonymity.

A senior official in the customs department confirmed that the delay has occurred as the examination of the goods has increased. "Earlier, we used to randomly check 2-3 percent of the products before the clearance. Now, the authority is checking each item before the approval," he said.

However, the official did not cite any specific reason behind the sudden increase in checking measures but confirmed that it started after the India-China standoff.

While the Customs or Central Board of Indirect Taxes and Customs (CBIC) authorities have not issued any written or verbal instructions to the officials at the ports, sources suggested that the move is aimed to reduce the consumption of Chinese goods and increase self-reliant India mission of the government post the Galwan Valley stand-off.

Another factor for the inflation in prices of Chinese electronic goods is the freight charges. The traders at Nehru Place market said that the increase in freight charges have also impacted the cost of the electronic items.

Sharma said that the freight charges have tripled after the lockdown. "The logistic companies increased their charges post the lockdown. We have to pay the amount thrice to receive delivery of our consignments. The logistic companies told us that the airfares for commercial activities have increased, and that's why the freight charges have risen," he said.

While the halt in domestic aviation has increased the commercial airfares, the delay in the release of imported goods from China has also played a role. A senior manager at Gati Limited said that besides the costlier airfares, the logistic companies have to bear the penalties, ground rent, and warehouse charges for the consignments they are assigned to deliver to their clients. "This has a huge role to play in the economics of price calculation of the goods," he said.

From importers to wholesalers, the import blockade from China has hit every component of the supply chain invariably. However, the maximum brunt of this blockade has to borne by the retailers. They are hit with the double whammy of business lost in lockdown, and the trade impacted due to the India-China conflict. The retailers estimated that the situation has made them lose 70 per cent of their existing businesses. Many of them have already shut their shops, and many others are looking to do so.

Kapil Narang, a retailer of computer accessories in Nehru Place, said that the inflated prices of the electronic goods are turning away customers. "People do not intend to buy Chinese items at high prices. The laptop charger, which we used to sell for around Rs 500, is now selling at Rs 750. People do not intend to buy Chinese items now. Only a very needy customer agrees to buy. I have lost as much as 70 per cent of my business. If this situation persists, I may have to shut my shop in the next couple of months," he said.

Mohd Asif, owner of Friends Computers, who deals in the retail of second-hand laptops imported from China, Dubai, and Hong Kong, said that he is barely managing to pay the monthly rent of his shop.

"We are forced to increase the prices of our items by 50 per cent. We are already walloped by the lockdown. Now the inflated prices of imported items from China are turning away our existing customers. I have not paid salaries to my staff, neither have I earned any sum. All the money I'm earning now is going to pay the rent of my shop," he narrated.

Swaran Singh, secretary of All Delhi Computer Traders Association, said that the government must come out with a solution rather than blocking the release of China-imported goods. "Till then, a robust policy is not drawn; the government must not create arbitrary situations to deal with China. Our industry, which is hugely dependent on Chinese goods, has already taken a huge hit in the lockdown. The ill-thought decision of holding back the consignments is adding to our woes," he said.

Singh warned that if the government does not immediately deal with the import crisis, the small players will have to shut their shops. "It has started already," he added (IANS)


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