Custom check for Chinese goods can worsen shortages of smartphones, laptops, TV !!

Kolkata: India’s move to check each and every consignment coming in from China will lead to delays and amplify shortages of smartphones, tablets, computers and televisions, said executives of leading brands and contract manufacturers. The disruption in the industry’s supply chain comes at a time when demand for these products is higher than supplies, they said. Three senior industry executives said supplies will be impacted for brands such as Apple, Xiaomi, Oppo, Vivo, OnePlus, RealMe, Lenovo and several online focused brands, as consignments for most of them are currently stuck at customs. Most of these brands work on extremely lean inventory levels. They said while some consignments were cleared on Wednesday, after the checks started on Monday evening, the pace of clearance is extremely slow since customs authorities are opening each and every consignment and matching invoice value, unlike earlier when clearances were fast-tracked. An executive from a leading Chinese smartphone maker said the company’s local manufacturing will be impacted because of depleting stock of components in India. Another executive, from one of the world’s leading electronics brands, said to delay will further hit the already constrained supply chain due to lockdown and increase delay in availability of products by another 5-7 days. “This is despite paying all necessary import duties,” he said, speaking on condition of anonymity. Sunil Vachani, chairman at contract manufacturer Dixon Technologies, which manufactures for brands such as Samsung and Xiaomi, said several brands are at zero inventory level and that with consignments stuck, manufacturing and supplies will be impacted.

“The shortage issue will now get intensified,” he said. Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), said the delay in customs clearance of components will further hurt smartphone manufacturing, which was hit by labour shortage, and delay availability of products to consumers. “Any disruption whatsoever, even of a single component, has a chilling impact on the entire supply chain,” he said. The ICEA represents companies such as Apple, Oppo, Vivo, Foxconn and Flextronics. Videotex International, which manufactures for 15 television brands, said it has only about seven days of inventory left. It has held back shipments that were coming by air for urgent production till there is clarity on the customs issue, said director Arjun Bajaj. “Manufacturers are not prepared for another setback when production levels are just coming back to normalcy post lockdown,” he said. India’s largest smartphone maker, Xiaomi India, said the company is monitoring the situation closely while Lenovo declined to comment. Emails sent to Apple, Oppo, Vivo, Realme and OnePlus remained unanswered. China is the largest sourcing base for India’s electronics industry. For instance, 65-70% of components for mobile phones and televisions are sourced from China while the figure varies from 25% in the case of washing machines to about 40% for lighting and 75% for air-conditioners. Some finished products, such as laptops, tablets, microwave ovens, premium smartphones and televisions, are almost fully imported from China.

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