Smartphone, electronics plants face shutdown as components wait for customs clearance

The stock of components in several smartphone and electronic factories has reached critically low levels because import consignments, particularly from China, are piled up for customs clearance, and several manufacturers said they may have to stop production this week.

Three senior industry executives said components of brands like Xiaomi, Oppo, Realme, Haier and Carrier Midea among others are stuck for custom clearance for more than a week now, impacting their production plans.

Jaina Group, owner of Karbonn smartphones and licensee of Sansui TV brands, already shut down its plant last Friday.

“These issues related to custom hold up are completely unnecessary right now and will further badly affect our business and job creation,” said Pardeep Jain, chairman of Jaina Group that also contract manufactures for some third-party brands. “We are already facing challenges to scale up manufacturing after Covid-19 with social distancing norms and shortage of migrant workers,” he said.

A leading contract manufacturer said it will run out of components for mobile phone production in 2-3 days, while one of the largest Chinese brands that runs its own factory said it has components for only six days of production.

Videotex International, which designs and manufactures LED television for 15 brands, will be forced to shut production from Thursday unless consignments are cleared immediately, its director Arjun Bajaj said.

The customs department has decided to thoroughly check each and every consignment coming from China before clearing it, leading to a pileup of goods in ports and airports for a week now. Earlier, consignments would get cleared in 1-2 days.

The customs decision came in the wake of increased calls for boycotting Chinese goods and products after 20 Indian soldiers were killed in a border clash between the two troops in Galwan Valley in eastern Ladakh.

The customs delay, however, has come as a stumbling block for several brands considering most of them work on lean and just-in-time components at a time when there has been an acute shortage of electronics products like smartphones since manufacturers are working at 40% capacity to meet social distancing and personal hygiene norms to minimise chances of Covid-19 spread in workplaces.

The CEO of a large Chinese electronics brand said it has now factored delays in custom clearance in future supply chain planning, but unless the current components are released, production will come to a standstill.

Emails sent to Xiaomi, Oppo, Realme, Vivo, and Foxconn remained unanswered till Monday press time. Flex and OnePlus declined to comment.

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 with screen sizes above 55-inches, too, are imported from China.

Smartphone, electronics plants face shutdown as components wait for customs clearance Smartphone, electronics plants face shutdown as components wait for customs clearance Reviewed by TechCO on 7/11/2020 Rating: 5

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