Govt working on draft order on new quality requirements for refrigerators

In line with its stated policy of making the Indian market more regulated by bringing in new technical standards for identified products, the Centre is working on a draft ‘Refrigerating Appliances (Quality Control) Order, 2020’ that proposes to make it mandatory for household refrigerators and freezers to use Indian standard marks under a licence from the Bureau of Indian Standards (BIS).

The new order, which will be applicable on all refrigerators and freezers sold in India, including imported ones, is expected to put a check on imports. But some in the domestic industry say that even local units may be hit due to the increase in compliance burden.

“The government has placed the draft order before the World Trade Organization members for their comments and is consulting domestic industry,” an official close to the development told BusinessLine .

Compliance with standard

According to the draft order prepared by the Department for Promotion of Industry and Internal Trade (DPIIT), the identified refrigerators (including frost-free) and freezers will need to conform to the specified Indian Standard and have to bear the Standard Mark under a license from the BIS.

India explained in its submission to the WTO that “higher level of quality, reliability and consistency and protection of the environment” were the reasons behind the move.

While the proposed date of adoption of the order is yet to be decided, the tentative date for implementation is January 1 2021, as per the note to the WTO.

According to figures compiled by the Commerce & Industry Ministry earlier this year, India is one of the most unregulated markets among major trading countries, with regulations on less than 10 per cent of its national tariff lines. A ‘focus class’ of 371 tariff lines (accounting for 26 per cent of total imports valued at $127 billion) was prioritised for fixing of new regulations, which was later pruned to 252.

“The main idea behind technical standards is of course to ensure safety, but it also checks low-quality imports and dumping and may discourage importers who do not want to go through quality checks again,” the official said.

Industry concerns

In the case of refrigerators, some domestic players complain that the proposed regulations could end up increasing the compliance burden for them. “Industry players are concerned that the harmonisation of Indian standards with international standards may lead to an increase in manufacturing costs and could also increase the contribution of imported components in certain categories such as frost-free refrigerators,” a source in the industry pointed out.

Some even question the need for the new quality control requirements on the ground that it was mostly high-end refrigerators that were being imported while about 95 per cent were being produced locally in strict adherence to existing domestic standards.

In 2019-20, the imports of refrigerators, freezers and other refrigerating/freezing equipment were to the tune of $590 million from a number of countries such as China, Thailand, South Korea, Germany and Indonesia, posting a growth of 5.5 per cent over the previous year, according to government data.

“The government is taking inputs from the industry on the draft order. A decision will be taken hopefully after meeting industry concerns,” the source said.

Interestingly, the Centre recently postponed implementation of a quality control order on toys as the domestic industry said that it was not yet prepared for it. It is also in similar discussions with the industry on a proposed quality control order for air conditioners.

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