Vietnamese Imports Stuck Due to India’s Quality Checks

Over two dozen Vietnamese companies have been waiting for certification from the Bureau of Indian Standards (BIS) for months, causing delays in their business. The Vietnamese government has raised this issue multiple times with India, hoping to speed up the process. These companies mostly deal in shoes and steel.

Delay in Certification

Vietnam’s trade ministry has asked India to expedite BIS certification for 26 companies, as the delays are hurting their business. Indian steelmakers are concerned about rising imports from Vietnam, which might be part of the reason for the slow certification process.

A Broader Issue

Other countries, especially China, are also facing delays in BIS certification. Vietnam is the second largest applicant for BIS certification after China.

Trade Between India and Vietnam

India and Vietnam had a bilateral trade of $14.70 billion in 2022-23. Vietnam exported $8.8 billion worth of goods to India, while India exported $5.9 billion worth of goods to Vietnam.

Why the Delay?

The Indian government has asked BIS for reasons behind the delay in certifying Vietnamese companies. These companies include manufacturers and traders of steel, footwear, polyester, tires, chemicals, toys, batteries, and plywood. Half of the applications are for renewals, and the rest are for new certificates.

Quality Control Orders (QCOs)

The number of applications for BIS certification has increased due to more Quality Control Orders (QCOs) aimed at curbing substandard imports and boosting domestic production. These QCOs require Indian traders to produce BIS certificates when importing goods, or they face penalties.

Vietnam’s Role in Trade

Vietnam has become a significant global supplier and has a trade deficit with India. India’s free trade agreement with ASEAN countries, including Vietnam, means tariffs can’t be used to balance trade. Instead, QCOs act as non-tariff barriers to protect Indian industries from cheap and low-quality imports.

Steel Imports

India’s steel imports surged to 8.3 million tonnes in 2023-24, with Vietnam being the fourth-largest exporter to India. Imports slowed after India issued a Quality Control Order for Vietnamese steelmakers last year. However, Indian steelmakers are concerned about the possibility of a resurgence in imports.

Concerns About Chinese Steel

Indian steel manufacturers worry that Chinese companies might use Vietnam and other countries to route their products to India, leveraging the free trade agreement. India’s growing demand for steel makes it a prime target for exports.

Chinese steel mills, facing a decline in domestic demand, have been flooding global markets, including India, with steel, lowering prices and challenging local manufacturers. If India doesn’t take protective measures like QCOs, imports from countries like Vietnam and China might increase, affecting local industries investing in expansion.