India–China trade ties: Chinese goods set to re-enter Indian markets — Why government is allowing it?

Chinese goods are set to re-enter Indian markets after nearly four years of stalled clearances triggered by tensions with Beijing.The government is working to quickly process pending applications from local companies seeking to bring in electronics components, footwear, everyday household items, steel products, raw materials and other finished goods. These imports require mandatory certification of the overseas manufacturing plant before they can be shipped into India.The approvals had been halted since early 2020, after border clashes between India and China led to deteriorating diplomatic ties. Local factories received quick clearances, while approvals for overseas, particularly Chinese, units were held up, causing supply chain delays, according to ET.

GST rate cuts fuel more demand

The freeze comes to an end as demand jumps sharply across consumer sectors, fuelled by GST cuts that prompted companies to slash prices to pass on the benefits of September 22 rate cuts and clear inventories faster than expected. Automobiles, large-screen televisions, washing machines, dishwashers and refrigerators have all seen unusually high sales, leaving manufacturers struggling to restock. Waiting periods have emerged for premium electronics for the first time, and companies say the backlog could take weeks to resolve.To address the situation, the department for promotion of Industry and Internal Trade (DPIIT) recently wrote to manufacturers, asking for “company-wise details where foreign manufacturers’ certification scheme is getting delayed.” The department has also sought updated information from industry bodies and associations.A senior government official said, “We will soon begin issuing and renewing licences for suppliers from several countries, including China.”“We will initiate the process and assess applications on a case-by-case basis,” the official further told ET.

BIS approval

Under the Bureau of Indian Standards (BIS) rules, certification is mandatory for any unit, domestic or foreign, that manufactures goods covered under the Quality Control Order. BIS teams physically inspect overseas factories before approvals are granted. While domestic facilities were cleared without delay, the approvals for foreign plants, particularly in China, slowed significantly, disrupting supply chains in India.The renewed processing of certificates also follows recent positive movement in India–China trade engagements. China has resumed exports of heavy rare earth magnets to India after a six-month pause, easing pressure on manufacturers in electric mobility, renewable energy and consumer electronics.In recent years, the government has deliberately kept BIS approvals slow as part of its push to build domestic capacities and increase localisation. Industry players have repeatedly argued that the transition requires time. Localisation levels differ across categories, for instance, only about half the components used in air-conditioners are sourced domestically, while the remainder is imported, ET reported.The chief executive of a major electronics firm that relies on Chinese components said the policy relaxation was necessary because, while the government continued to push for local value addition, often local production and supply chain was suffering due to scarce availability of domestic inputs.The accelerated clearances are expected to help manufacturers restore inventories and prevent further shortages during the festive and year-end buying season.

Diplomatic ties ease too

Political signals have also shifted. Direct flights between the two countries have restarted, and India has begun clearing business visas for Chinese nationals. This follows Prime Minister Narendra Modi’s visit to China in August, where he met President Xi Jinping. Investment flows from China, however, remain subject to approval under Press Note 3.