Indian Economy News

Govt plans platform for private standards

New Delhi: In an effort to safeguard its export interests from sweeping discriminatory standards developed by private entities such as supermarket chains, India is in the process of creating a national platform for private standards that will deal with evolving trade rules.

The so-called private standards mostly apply to food, textiles, leather and footwear products and are set higher than globally agreed standards.

For example, under private food safety standards, a US supermarket chain can mandate the sourcing of food items only if they contain lower chemical residues than is internationally accepted, thus making compliance expensive for small and medium enterprises in developing countries.

Although not legally mandatory, they can become a market-entry hurdle if used by key market entities through their commercial leverage, especially for small- and medium-sized producers and exporters in developing countries.

Some private standards may also be incorporated in government-set technical requirements.

While India has proposed to use World Trade Organization (WTO) regulations such as sanitary and phyto-sanitary standards and technical barriers to trade against such private standards, there is no consensus on the issue.

The proposed platform will be developed under the guidance of the commerce ministry, supported by the United Nations Forum on Sustainability Standards (UNFSS).

UNFSS is a joint initiative of five United Nations agencies created to provide information and analysis on private standards related to occupational safety, environmental, social and animal welfare issues.

“This will bring together government and private-sector stakeholders and support their engagement with the broader Indian standards community, utilizing the technical, analytical and institutional support of the UN system. The UNFSS-supported national private standards platform will be a strictly nationally run and India-led public-private initiative,” Arpit Bhutani, India observer at UNFSS, said.

An Indian government official, who spoke under condition of anonymity, confirmed the partnership.

Bhutani said the need to address private standards becomes even more important in the context of mega regional trade pacts such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership.

“These agreements would make the transformation of private standards into de facto international standards when the lead firms in global value chains use their private standards as a basis for the relevant standards in their domestic markets,” he added.

With customs duties on goods consistently falling, the standards have effectively replaced tariffs in international trade.
Countries are developing higher standards and designing products to meet them.

India is now trying to catch up with this trend, especially after Prime Minister Narendra Modi’s slogan of “Zero Defect, Zero Effect”.

The commerce ministry’s Standards Conclave in April decided to set up a standards training institute in partnership with the Quality Council of India and the industry group Confederation of Indian Industry.

On 17 June, the cabinet approved the Bureau of Indian Standards Bill, 2015, to establish the Bureau of Indian Standards (BIS) as the national standards body of India.

The new bill, expected to be tabled in the monsoon session of Parliament starting 21 July, is expected to usher in a mandatory certification regime, which the government considers necessary from the point of view of health, safety, environment, prevention of deceptive practices and security.

This will also help consumers receive ISI-certified products and bar imports of sub-standard products.

“The proposed provisions in the new Bureau of Indian Standards Bill, 2015, will empower the central government and the Bureau of Indian Standards to promote a culture of quality of products and services through mandatory/voluntary compliance with Indian standards through the process of ‘product certification’ and a ‘certificate of conformity’ with a broad objective of consumer’s welfare. It is also expected to improve enforcement of Indian standards,” a cabinet statement said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.