ELP Podcast Series - BIS in India : Simplified for you

The second episode of ELP’s Podcast Series simplifies the complex web of BIS Certifications in India for our listeners. Encompassing the areas of compliance, international trade and non-tariff barriers, BIS certifications are increasingly gaining relevance for domestic industry, traders and companies exporting to India. The podcast will discuss the simple steps for the companies to follow, the dos and don’ts and what pitfalls they should watch out for. 

This podcast is part of a 2 part series on BIS. The 2nd episode will be released within a fortnight. 

For more information please visit https://elplaw.in/

Transcript

Parth Jha  0:06 
Hello, everyone. Welcome to the second edition of the ELP Podcast Series. My name is Parthsarathi  Jha, and I'm your host for today's session of the podcast. Today, we will be focusing on the hyperactive bureau of Indian standards, which has issued several quality control orders in recent times. These quality control orders have spanned over various sectors, including chemicals, petrochemicals, twice, and several other critical goods. This has generated, of course, a lot of curiosity among foreign exporters, importers, as well as governments. In fact, several governments have raised questions to questions to India at the WTO on these matters, which they call technical barriers of trade. In today's session, we'll focus on the BIS regime in India and the implications of recent quality control orders of BIS on foreign exporters will then follow it up with another session where we will discuss more granular topics. With this note. Let me introduce my today's guest is Sanjay Notani, Senior Partner at ELP. Sanjay, welcome on board.

Sanjay Notani  1:11 
Thanks, Parth. Happy to be part of this podcast.

Parth Jha  1:15 
Okay, let's begin then. Sanjay, the issue of BI certification has gathered a lot of attention in recent times, particularly for sectors like chemical steel and textiles. Could you take us through exactly what the certification process is? And what does it mean for foreign producers of these goods?

Sanjay Notani  1:34 
Thanks Parth. It's a very important question. Firstly, before we address this question, it is also very important to understand the genesis of why this standard is gaining so much attention. The main reason as you pointed out in your introduction, is due to the increasing use of standards not only in India globally as a barrier to trade and to discourage imports. The BIS is the national standards body of India, governed under the Ministry of Consumer Affairs. BIS certification enables the certificate holder to offer third party guarantees by way of quality, safety and reliability of products to the customers. Licensing holding the certification is thus allowed to use the ISI mark on their goods, which signifies that the products means and meets the Indian standards that are set and complies with the same while the certification have been voluntary. Very recently, it has been made mandatory by the Indian government for a number of items, such as chemical Steel's textiles and other products. This is done by way of a quality control order which has been issued by the parent ministries in consultation with the BIS once mandatory BIS is notified in the public Gazette on a particular product. No one can sell it on the India market without the BIS certification. Thus, there are been a lot of concerns surrounding the imposition of mandatory BIS certification, including the amount of costs administrative delays faced by the producers, thus impacting the users. In trade jargon, as we understand mandatory BS certification is nothing but a technical regulation. Under the rules of the WTO technical regulations cannot be more trade restrictive than necessary, which is to seek the balance between both the domestic as well as the imported products. Unfortunately, a lot of producers are of the opinion that the process of the BIS certification is trade restrictive. And a lot of questions are being raised time and again by the member countries at the WTO TBD Committee meetings. Thank you.

Parth Jha  4:14 
Thanks for this detailed explanation. Sanjay. Just to understand it from a layman's perspective, assume that if I'm a Foreign producer and if my goods are designated as mandatory by BIS what does this exactly mean for me? I mean, do I need to take any specific actions are there any processes to follow?

Sanjay Notani  4:34 
So before we get to the stage where a product is notified as mandatory, there are many steps that we can take. Let me step back and explain you the process as to what a stakeholder can do. This includes a standard formulation and revision as well as deciding whether a product is to be brought under a mandatory BIS as I explained to you earlier this decision is taken by the health of the parent ministries. Ideally, we can all expect that this process should be transparent. However, the government has not been keeping in terms of consulting with the stakeholders whether to design the standards or to make it mandatory. Unfortunately, most of the time, the consultation processes are have been limited to only domestic users. Basically, the producers in the country who are asking for these standards to be put up. Thus, there is a need for process to be made more inclusive for bringing in wider stakeholder consultations with the help of foreign producers, importers, users, which will help the process more accessible not only for the producers in India but also abroad. Despite this, there are some limited avenues, which I think are available for foreign producers who try to participate in it. It is therefore critical that the communication and information gathering process remains robust between the importers, trade bodies, line ministries, and lastly, the embassies of every country who would be affected by this to participate in this process.

Parth Jha  6:29 
Thanks, Sanjay. Once again, you mentioned that foreign companies exporting to India can be severely impacted if their products come under BIS. You also mentioned that all hope is not lost, and there are few opportunities which they can explore. Can you elaborate this point for our listeners, please?

Sanjay Notani  6:49 
Well, first of all, we'll have to focus on the product itself. So the BIS has various sectional committees responsible for the products in question. These committees are actually responsible for developing and formulating the actual standard with the products are required to comply. Unfortunately, in the past, we have seen much of the standards tend to utilize the testing methodologies that are not in line with the globally accepted norms, which are based on either an ISO or an ASTM, thus makes it very difficult for a foreign producer to comply with the standards leading to excessive cost and delay of time, like I explained to you. This also leads to an odd situation for domestic producers, unfortunately, of who are sticking to these outdated methods, and consequently not in line with the global best practices. Thus, it is important that before an application is made, any producer should ensure that the standard is going to be made mandatory is one that they are able to comply with it as well as accepted globally. Now, if the mandatory certification is in place, the first important part here is for a producer to begin and analyze the existing bi standard on the products and identify the gaps and issues with the testing methodology in line with practically what they do today, in their day to day business. This can be taken then to see what these gaps are with the BIS sectional committees either by filing a letter or a representation with the help of the stakeholders, such as the user import, or the embassy and accordingly, you know, filing these representations will help for the sectional committees to address some of these issues. Last but not the least, it's also very important that the Embassy of the country can also play a role in helping these representations to be very well understood by the sectional committees and ultimately to see that these kinds of mandatory certifications are nothing but a trade facilitation and not a barrier. An important area where also the government may come and step in is once the standard is notified at the WTO essentially, once a standard is formalized the proposed quality control order or the mandatory order which we are talking today is notified at the WTO especially at the committee on the TBD all the WTO members have 30 days to provide their comments on the standard and mandatory certification. So just to give you an example, suppose you had filed a representation which was not satisfactorily answered by the Indian Embassy of the country where the foreign producer is residing, or is going to be affected by it can bring this before the TBD committee and the embassy or the permanent mission in Geneva can ask these questions to the TBT committee to resolve some of these issues with India to ensure that the standards which finally come out are in compliance with the standards which are already in place by the company. So, in this way, we will be able to address most of these issues, which are before the BIS standards, and accordingly how these mandatory certifications come in affect your business time and again.

Parth Jha  10:32 
Thank you, Sanjay, for your insights. These are indeed very helpful and that actually begs question about how to go about seeking a BIS license in India given its very cumbersome regulatory process, but unfortunately, we will not be able to discuss that in today's session, and we will discuss in next session with our colleague Miss Naghm Ghei. Thank you very much listeners.