Emphasis on Make in India Initiatives with Focus on Country of Origin Declaration Mandate

Parveen Arora and Suruchi Kotoky

"Come, make in India. Come, manufacture in India. Sell in any country of the world but manufacture here. We have got skill, talent, discipline, and determination to do something. ” – this was the appeal made by the Hon’ble Prime Minister of India in his maiden independence day address on 15 August, 2014 .

Fast forward 2020-21, the ball has actually started rolling with various Atmanirbhar Bharat (Make-in-India) initiatives being actually kick started and implemented in full spirit by the Government of India (GOI). One such initiative was mandatory declaration of the name of country of origin (“COI”) on all imported products. The requirement was made mandatory in 2018 by amending the Legal Metrology (Packaged Commodities) Rules, 2011 however, momentum in enforcement is catching up now.

Recently on 10 August, 2021, the Union Minister of State for Consumer Affairs, Food and Public Distribution, Shri Ashwini Kumar Choubey in a written reply to a question in Lok Sabha informed that the Department of Consumer Affairs had issued 183 notices in the past one year to e-commerce entities for violation of provisions pertaining to display of COI declaration. We provide below a timeline on COI declaration action and associated make-in-India initiatives taken by GOI.

Timeline – COI Declaration

1 January 2018	Legal Metrology (Packaged Commodities) Amendment Rules, 2017 (“LMPC 2017 Rules”) came into effect. The LMPC 2017 Rules inter alia mandated declaration of the name of COI on all imported products. Further, it also introduced inter alia the definition of e-commerce entity and provided for certain mandatory declaration (including COI declaration) to be displayed by such e-commerce entity on their digital/electronic network, used for e-commerce transactions. Subject to e-commerce entity fulfilling certain conditions as stipulated in LMPC 2017 Rules, the responsibility of the correctness of declarations was on the manufacturer, seller, dealer or importer. Contravention for not declaring COI is punishable with fine and/or imprisonment, which may extend to one lakh rupees and one year respectively. However, it is a compoundable offence.
30 June 2020	A writ petition was filed by Mr. Amit Shukla, before the Hon’ble High Court of Delhi allegedly seeking compliance of COI declaration by e-commerce sites. Pursuant to this writ petition, notices were inter alia issued to major e-commerce entities including Amazon, Flipkart, Ajio, Decathlon and Snapdeal by the Hon’ble Court.
23 July 2020	Consumer Protection (E-Commerce) Rules, 2020 were notified, which inter alia imposed the obligation on the Seller, who is offering its goods or services for sale on a marketplace e-commerce entity to provide COI details to the e-commerce entity to be displayed on its website.
30 September 2020	Media reports indicate that DPIIT granted extension until September 30, 2020 to all e-commerce entities to comply with the requirement of COI declaration. These media reports claim that there was not any official notification from DPIIT for such extension.
December 2020	​As per media report, basis the submission of e-commerce entities like Flipkart, Amazon, Snapdeal and Decathlon that they are complying with the requirement of displaying COI on products sold on their platform, the Hon’ble High Court of Delhi directed Centre to verify whether the submission made by the e-commerce entities are genuine.
​21 July 2021	Amendment to Consumer Protection (E-Commerce) Rules, 2020 was proposed and circulated for public comments. As per the draft Amendment Rules, e-commerce entities are obligated to display COI declaration prominently on their portal. Further with respect to imported products, the e-commerce entity inter alia are required to provide a filter mechanism and display notification regarding COI at the pre-purchase stage along with suggestions of alternatives to ensure fair opportunity for domestic goods.
10 August 2021	​It was informed in the Parliament that 183 notices have been issued by the Department of Consumer Affairs in the last one year to e-commerce players for violations of COI declaration.

Recent Trend

Now the question arises that although the COI declaration requirement was made effective in 2018 itself and e-commerce entities were allegedly given extension until September 30, 2020 to comply with it, why has the requirement being enforced strictly now in this year by the legal metrology department.

It seems that the only reason for the issue to resurface now is due to accelerated promotion of indigenous manufacturing. In this regard, it is pertinent to point out the introduction of few of the below-mentioned initiatives by GOI, which indicates the growing trend and shift towards local manufacturing and reducing import dependency.

1. Compulsory DPIIT registration requirement in public procurement: As detailed in our earlier update, the Department of Expenditure, Ministry of Finance vide its office memorandum and following Order (Public Procurement No. 1) mandated registration with the DPIIT for all bidders who are participating in public procurement and are from a country, which shares land border with India. This was issued on the grounds of defence and/or national security considerations. Immediately thereafter, the Government e-Marketplace (GeM), the public procurement platform for government buyers, made it mandatory for sellers to enter COI for all its products.
   

2. Introduction of PPP-MII Order: The Public Procurement (Preference to Make in India) Order, 2017 (“PPP-MII Order”), which was last revised on 16 September 2020 is another initiative by GOI to encourage “Make in India” and promote domestic manufacturing. The PPP-MII Order made only Class-I and Class-II local suppliers (having local content > 50% and > 20% respectively) eligible to bid in public procurements for bids below INR 200 crores, with purchase preference being given to Class-I local supplier. In pursuance to the PPP-MII Order, GeM also enabled a provision for indicating the percentage of local content in GeM registered product, in terms of PPP-MII Order. With these features on the GeM portal, government buyers could filter and choose to buy make-in-India products.
   

3. Introduction of PLI Scheme: Production Linked Incentive (PLI) Scheme was launched to boost domestic manufacturing and with the aim to make it globally competitive, reduce import dependency and generate domestic employment opportunities. This scheme incentivises incremental sales from products manufactured in India over the base year. The Union Cabinet had approved the introduction of PLI schemes in 13 key sectors. We had in our earlier update provided a summary of PLI scheme on one of the key sector that is, high efficiency solar PV modules.

Conclusion

In view of the above, it is apparent that GOI is indeed serious about its commitment on making India the new global manufacturing hub and discouraging/reducing its import dependency, especially with those countries which share land borders with India (owing to defence and national security considerations) and upon whom India was heavily reliant on for its import. It is therefore advisable for all importers, manufacturers, dealers, sellers and/or resellers offering imported goods through a marketplace e-commerce entity, to adhere to the requirements under Legal Metrology (Packaged Commodities) Rules, 2011 (as amended), including displaying ‘country of origin’ declaration, prominently on the imported products in the digital platform.