Special Issue
The increasing number of trading regulations faced by the Indian industry are a matter of serious concern for the Government, admits Union Commerce Minister Anand Sharma, as he details the steps being taken to tackle the same, in a conversation with Renu Mittal.


Q:What are your first reactions as Commerce Minister?

A: Surely it’s different as compared to Foreign Affairs and Information and Broadcasting. However, purely from the commerce angle, there is a significant and substantial engagement with the rest of the world. There are lots of international commitments that are integral to my work here. And in that context, one has the benefit of experience in the External Affairs Ministry and familiarity with some of the subjects which had to be brought to our attention. And these are subjects that are presently very important when it comes to interaction PROTECTING INDIAN INDUSTRY FROM UNFAIR BARRIERS 4 Quality India July 2009 Cover Story Anand Sharma.qxd 8/24/2009 10:17 AM Page 2 5 Quality India July 2009 between governments. But here you have to go about them in detail. From the industry side, you are talking about your country’s development in different states, different regions, what is the nature of support the government can give in terms of incentives, how we can expand it.

The Indian industry is facing a number of technical barriers in exports, both TBT and SPS, imposed through the regulatory regimes of importing countries. What is India’s strategy to deal with these barriers?

With the lowering of tariffs across the globe, Non Tariff Measures (NTMs) are increasingly being used by trading partners as regulatory measures to discipline the flow of goods and services. Most members maintain NTMs to address their legitimate concerns on human, plant and animal health; adherence to standards (including safety); environmental concerns; unfair trade practices such as dumping, etc.

However, one cannot rule out some of these measures being maintained purely for unfair protection of their domestic industries and for impeding trade in goods and services. A large number of these measures are argued by proponents as permissible under the prevailing WTO agreements and flexibilities provided therein, thereby making it difficult to discipline them. As health, safety and environmental concerns increase, there is likelihood that NTMs, in the form of sanitary and phyto-sanitary (SPS) and technical barriers to trade (TBT), would be used by trading partners.

It is not surprising to see that most of the NTMs are maintained by developed countries, especially on products of export interest to developing countries. The product categories where NTMs are proliferating are food products, chemicals (including pharmaceuticals), textiles and clothing, leather, engineering products, etc. The problem of NTMs is especially compounded for developing countries, such as India, that have a dearth of data and specific information on the NTMs and their impact on trade, domestic industry and consumers. To address these problems, the following measures have been taken:

  • We participate in the process of international standard setting, which is the basis of regulations/ NTMs. We also comment on draft regulations of other countries so that our concerns are appropriately addressed.
  • A database of SPS/TBT measures of other countries has been built, so that the exporters have an idea of the SPS/TBT measures that will impact our exports to a country. If it is a justified measure, they could prepare themselves for compliance and the Government has schemes to strengthen this capacity. If a measure is not justified, then an explanation is sought from the importing country bilaterally, or through forums such as WTO, SPS and TBT Committees. If still not satisfied, there is the option of raising a WTO dispute on the issue.
  • The Department is also trying to have bilateral deals with other countries on SPS-TBT issues as a standalone measure or as part of the RTA/CEPA negotiations, such as in Indo-Korea CEPA (Comprehensive Economic Partnership Agreement). This deals with aspects such as recognition of conformity assessment procedures, accreditation, technical assistance, etc.
We are increasingly moving towards limited accreditation bodies in the country.We are also trying to unify our regulatory work.We are trying to work in the direction of eliminating ultiplicity of authorities.
  • Based on the mandate from the Committee of Secretaries, the Department of Commerce has constituted an Inter-Ministerial Committee (IMC) which would, among other things, also oversee issues related to NTMs, such as monitoring of NTMs imposed by other countries on India’s exports, institutional capacity building to carry out conformity assessment procedures and specific measures to tackle NTMs.

India's position in negotiations on technical barriers would remain weak if we do not upgrade our domestic regulations to international standards. Would you consider taking the initiative to push the domestic regulators to review their regulations in a time-bound manner?

It is true that domestic regulations would help us negotiate technical barriers with other countries on equal terms. The IMC referred to above has also been tasked with recommending/suggesting standards, technical regulations and conformity assessment procedures to address legitimate domestic concerns, such as protection of human, plant and animal health; safety; protection of environment; unfair trading practices, etc. However, our regulations have to keep in view the capacity of the domestic industry to comply with them.

One of the common complaints in the industry is that we accept foreign testing or certification quite easily, while the other countries do not accept testing or certification by Indian agencies. Has the Commerce Ministry looked at this aspect to ensure that acceptance of testing and certification is on mutual recognition basis?

This is being taken care in the FTA negotiations/other bilateral trade agreements through mutual recognition agreements on conformity assessment procedures, equivalence agreements, and making use of accredited bodies. In fact, through use of Supplier Declaration of Conformity (SDOC) on our exports, we want to do away with the need for third party testing and certification for our exports completely.

We are increasingly moving towards limited accreditation bodies in the country.We are also trying to unify our regulatory work.We are trying to work in the direction of eliminating ultiplicity of authorities.
Internationally, the activities of conformity assessment and accreditation are increasingly being performed by professional bodies, while in India, and even in the Commerce Ministry, a number of organisations duplicate each other's work. How would you ensure that multiplicity of agencies is eliminated in the areas of regulation, accreditation and conformity assessment among government agencies?

Conformity assessment work is not only handled by Government labs and inspection/certification bodies but also private bodies who seek accreditation from accreditation bodies affiliated to international organisations, such as ILAC/IAF. CA needs multiple bodies to handle the volume of exports, as well as needs of domestic market.

We are increasingly moving towards limited accreditation bodies in the country — NABL under the Ministry of Science & Technology and NABCB under the Quality Council of India. There are only a few other accreditation bodies, such as APEDA for organic produce. We are also trying to unify our regulatory work — FSSAI is now the single regulator for all foodrelated laws. We are trying to work in the direction of eliminating multiplicity of authorities.

Apart from regulatory barriers, India’s exports are also suffering due to several voluntary and private initiatives like Forest certification, Global Gap certification, Fair Trade certification, Private Food Safety standards, etc. How does the Commerce Ministry propose to tackle this issue?

Developed countries’ markets have seen a number of private standards come up. These have become virtual market access requirements in certain sectors, such as food products. We are working in the direction of using the SPS and TBT agreements to regulate the use of such standards. We have already submitted a proposal on these in the WTO.

Labour issues are currently not part of the WTO agenda and we are not willing to draw any linkages with trade. However, we have our domestic labour regulations, including provisions to guard against the use of child labour.

The European Commission has enacted a law on accreditation and market surveillance to strengthen regulation, since more and more private sector resources are being used. It is aimed at bringing transparency, objectivity and acceptability of products and services at the global level. How does India propose to respond to this development and initiate similar mechanism in our country?

In the 11th Plan document, there is a proposal for regulation of conformity assessment, which would cover accreditation. The Industry side of the Ministry of Commerce & Industry needs to take that up. Market surveillance — as more and more conformity assessment bodies, especially from private sector are used in domestic regulation, the need for separating market surveillance from them would be felt, which regulators should handle independently — is needed to sensitise regulators to take cognizance of this in their regulatory regimes.

What is your overall roadmap to enhance quality across the board in India over the next five years? Our Commodity Boards, such as APEDA, Tea Board, Spices Board, Tobacco Board, etc. are working in the direction of improving the quality of agriculture produce. The industry is also taking voluntary steps in this direction. We also help the Export Promotion Council take up specific products for promoting exports, including through quality promotion.

Further, export units having ISO 9000 (series)/ISO 14000 (series)/WHO GMP/HACCP/SEI CMM level-II for exports of services and agro products are entitled for double weightage on exports made for grant of Export House status by DGFT.

One of the main complaints, not just in India but across many other countries, is that Chinese products are cheap but tacky, of poor quality. How will you stop that happening with our products? Where health and safety issues are concerned, we will not hesitate to bring in a domestic technical regulation that would automatically apply to imports. Such regulation would also apply to Indian goods in accordance with the National Treatment Principle. Any need for regulation has to balance between the needs of consumer health & safety, and the capacity of the domestic industry to meet the requirements of the regulation.

However, we need to find a way of fast-tracking regulations — the DIT initiative for safety of electronics and IT products is stuck for over three years now. There is also need for looking at alternate ways of checking compliance, rather than through the traditional inspector regime.