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 at Galwan valley in Ladakh a fortnight ago has resulted in an unofficial embargo over the trade of electronic goods from China.
Since 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 per cent. 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 per cent 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 per cent 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 per cent 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.