Chinese firms face scrutiny from govt departments, domestic rivals in India

Chinese firms face scrutiny from govt departments, domestic rivals in India

New Delhi, Jan 10: What do e-commerce company Club Factory, telecom gear manufacturer Huawei, and popular application UC Browser have in common? Nothing, except they are all Chinese companies coming under increasing scrutiny from government departments as well as their domestic rivals in India.
Last week, the Mumbai customs department clamped down on Chinese e-commerce players like Shein, Ali Express and Club Factory for sending shipments as ‘gifts’ to customers in India and avoiding duties. Customs officials allege that the companies are exploiting a law which permits Indians living abroad to send ‘gifts’ worth up to Rs 5,000 to relatives at home without paying any duty.
The Federation of Indian Export Organisations (FIEO) is pushing the government to act. “We have told the government that it should remove the duty exemption for gift items up to Rs 5,000 or limit the benefit to a single consignor,” said a senior FIEO official.
The Swadeshi Jagaran Manch has pointed out that these apps pose a threat to domestic manufacturing and retailing as they do not pay relevant taxes such as GST, giving them a huge edge over local players.
The indignation over the e-commerce players comes close on the heels of a stinging attack on Chinese telecom equipment manufacturer Huawei by domestic manufacturers who believe that Huawei’s gear, and that of ZTE, poses a security threat to India. A few months ago, the army directed its troops not to use 41 Chinese messaging and social media apps on their devices for fear that they could contain spyware and could be hacked.
Chinese firms face scrutiny from govt departments, domestic rivals in India Similarly, the Telecom Equipment and Services Promotion Council has urged the government to restrict the use of Chinese telecom equipment over security concerns. The Council has complained, further, that while the Chinese have been imposing various non-tariff barriers on exports of equipment to their country, India has opened its doors to theirs.
The Centre for Internet Society has suggested that the situation calls for more government intervention, ie that Chinese players with a stipulated number of subscribers must set up an office here if they want to continue to operate. Or an audit should be made of the apps. Or perhaps rules need to be put in place to prevent someone harvesting SMS data.
In the midst of this brouhaha, the government response has been muted. The Department of Industrial Policy and Promotion (DIPP), the nodal agency for e-commerce sites, said it cannot unilaterally cut off consumer access to open domain applications.
“The same can be said about a lot of apps registered outside India and providing services here. We can’t prosecute everyone as of this point,” said a DIPP official in response to the claim that the Chinese apps were breaking the rules.
Instead the DIPP is pinning its hopes on the new e-commerce rules which are being drafted and which will incorporate data privacy and taxation issues, apart from a host of technical aspects such as technology transfer, server localisation, and connectivity issues. “Since the scope of the policy is broad, the new draft may incorporate specific clauses that establish certain criteria for foreign companies selling their products and services here,” said the DIPP executive.
This is not to say there is total stasis. The Finance Ministry, for example, is considering limiting the number of ‘gift’ consignments to four per person per year. And in Mumbai, the customs office has told staff to keep an eye out for mis-declaration and smuggling of goods imported through couriers.
But a senior official at Jawaharlal Nehru Port Trust – India’s largest entry point for such goods – said it was difficult to physically check the parcels. He said standard operating procedures may need to be put in place for the vigil to be effective.