European companies should know about BIS registration in India

Before you start importing or manufacturing your product in India, it is wise to check whether you need a mandatory BIS registration. This is a hallmark issued by the Indian government to guarantee the quality of specific products. There are registration options for around 900 products, but for more than 300 products BIS registration is actually mandatory. For example, foodstuffs, household electrical products chemicals, cement and steel. In this article, we explain what a BIS registration is and how you can obtain one.

What does BIS stand for?

The 'BIS' in BIS certification stands for the Bureau of Indian Standards, which is the national certification body of India. The bureau was established in 1986 with the aim of: 

• offer consumers safe goods of reliable quality

• minimising health risks for the consumer

• human, plant and animal safety

• environmental safety

• prevention of misleading commercial practices

• promotion of a culture of quality through the application of good manufacturing practice

• educating the industry in various aspects of standardisation and testing

• promotion of exports and encouragement of import substitution

• monitoring the distribution of plant species

• minimising waste

The BIS Product Certification System is one of the largest in the world, with over 26500 licence holders for more than 900 products. BIS certification allows licensees to use the popular ISI mark on their product, which in India is synonymous with a quality product. Within the BIS Product Certification System, there are four different ways or 'schemes' by which producers can apply for registration depending on their product.

The four different BIS Certification Schemes

1. The normal procedure for domestic manufacturers 

The applicant must submit the BIS certification application with the required documents and the required fee. After submitting the application, a preliminary factory assessment is carried out by a BIS employee. Subsequently, samples are tested at the factory and samples are also taken for independent testing in an external laboratory. BIS certification is granted if the samples meet the standards. Under this method, BIS certification is expected to be granted within 4 months of the application being submitted.

2. Simplified procedure for domestic manufacturers 

In the simplified procedure, in addition to the documentation required for the BIS registration, the applicant must also enclose a test report of a sample by a laboratory recognised by the BIS. If the test report is satisfactory, an inspection of the factory site is carried out by a BIS employee. The BIS certification is granted if the verification by the BIS officer is sufficient. With this method, it is expected that the licence will be granted within 30 days after submitting the BIS certification application with the required documents and the test report.

3. ECO Mark Scheme 

BIS license for environmentally friendly products is granted under a scheme separate from the normal BIS certification process. Eco-friendly products must meet additional requirements to qualify for the ECO mark. However, the licensing procedure is similar to that of the scheme for domestic producers.

4. Foreign Manufacturers' Certification Scheme (FMCS).

Foreign manufacturers should apply for their BIS registration, if mandatory, through the FMCS. In addition, it is also possible to obtain the registration as a foreign manufacturer if it is not mandatory for your product. 

Applying for a BIS registration through the Foreign Manufacturers' Certification Scheme (FMCS)

Over 300 products, ranging from air conditioners to aluminium foil, require foreign producers to apply for BIS certification. In addition, a mandatory registration is required for 49 electronic & IT products that are not on the standard list, because the application for that certification does not go through the FMCS. More about this specific application can be found here.  

To obtain the BIS registration, you first need to apply to the BIS and pay the application fee for registration. Please be aware that a separate application is required for each product. The application to the BIS can be done by two entities:

• Your Indian liaison or branch office (as long as it has all the rights of the Reserve Bank of India to file an application) 

• A legally appointed agent in India

It is highly recommended to choose the second option. The process starts with a lot of paperwork in which you have to demonstrate how the quality of the product is guaranteed. It has to be explained on paper exactly how the production processes work, from the purchase of the raw materials to the ways in which the final product is tested. Only a local expert with specific experience in applying for BIS certification for international companies will understand how everything needs to be documented and submitted. If you place this task with your local entity and they start without experience, you are bound to experience a delay of several months.

Once your representative has submitted everything, your application will be examined by the BIS. If it is found to be complete, your application will be officially registered. A visit to your production facility is then scheduled with your Indian representative. The costs for this visit are at your expense and include working days, travel and accommodation expenses and the BIS employee's daily allowance. During the visit, the inspector will check the following items:

• Whether your production process and your testing facilities meet Indian standards

• The competence of your permanent test staff

• Whether samples of your product meet the requirements of the Indian standard.

The BIS inspector does not only carry out tests on site, but also takes samples which you must have tested by an external BIS-approved laboratory in India. The costs for these tests are also for you.

If the BIS considers the results of the inspection sufficient and the independently tested samples also meet the Indian standard, you will receive your BIS registration. Your representative must then sign the terms of the BIS agreement. This means that you are willing to comply with the Scheme of Testing and Inspection (STI) and will pay the annual minimum marking fee and the licence fee. 

Minimum marking fee and licence fee 

You have to pay the annual minimum marking fee (amount depends on your product) and the licence fee (₹1000) once the BIS registration is granted. Thereafter, you may pay the marking fee either quarterly or annually. A BIS licence is normally granted for the duration of one year, but extension options of up to 5 years are available for most products.

The renewal process is much simpler than the initial BIS registration as it does not require a visit to your facility. When applying for a renewal, you must submit the following documents:

1. Renewal form

2. Production details of products marked ISI

3. Extended bank guarantee (six months longer than the validity of the licence)

4. Proof of payment of the marking fees

No Objection Certificate

It sometimes happens that the code of your product indicates to customs that a BIS registration is required, but this is not the case. It also happens regularly that customs confuses products that are "similar" to your product and fall under the "mandatory certification". Your product is then detained by the authorities, leading to considerable delays, and you may even be fined.  

In order to prevent this, a special "No Objection Certificate" (NOC) can be requested from BIS, which proves that the material is not subject to "compulsory certification". BIS checks on a case-by-case basis, using test reports, product specifications, declarations and other evidence, whether a NOC is applicable. However, the fee for this certificate is limited. It takes approximately two months to obtain an NOC. A NOC is issued for every import of the same product and must be presented together with the cargo documents. 

Setting up your own factory in India: here's how to avoid the most common pitfalls

If you want to start manufacturing in your own factory in India, you cannot simply copy-paste your European set-up. During the process, you need to take into account possible adjustments to your original plan so that your factory complies with Indian regulations and fits well with local practices. We will guide you through each step of the process and share pitfalls that many European companies fall into in India.

Finding the suitable location

As with finding a suitable producer, location choice when setting up a production facility is also very important. We often see European companies choosing a particular location because other companies within the industry or competitors have previously chosen that location.

No thorough location analysis is done in such a case to examine whether the necessary infrastructure is in place, whether the state or cluster has the right raw materials and semi-finished products, and whether enough and suitable personnel can be found. Choosing the wrong location can lead to irreversible problems in the long run, resulting in a departure from India.

This mistake can be easily avoided by engaging local experts who will conduct a location analysis across the country based on your needs and desires. It is important during this process to put aside any preferences and prejudices you may have and evaluate as objectively as possible the selected locations from the analysis.

After establishing a top three locations that meet your requirements, you can let your preferences factor into choosing the actual location and work with your local partner or consultant to find a suitable piece of land or existing facility that you would like to take over.

Brownfield investment

If there is a desire to establish one's own production site, but not to incur the high start-up costs associated with a greenfield investment (building one's own facility), then an existing facility can be sought to lease or purchase.

Such a brownfield investment is often done through an acquisition (M&A) of a local business. If this is chosen, the aforementioned location analysis can be expanded to include a partner search and due diligence once a potential partner is found.

There are interesting advantages to a brownfield investment:

• costs are lower on average due to the use of existing facilities, infrastructure and personnel already employed,

• it allows it to take over existing approvals and permits, saving a lot of work and time.

But there are also things that can work against it and should always be checked carefully before signing any potential agreement:

• In India, production facilities often look "simpler" than in Europe, which does not mean that they produce lower quality as a result. If an acquisition is chosen, however, it must be carefully checked that the location meets European standards.

• It is also important that the site has the proper permits to allow the facility to scale up or expand; you obviously want to avoid the possibility that you would not be able to adapt the facility to new production needs over time.

Therefore, if you choose to make a brownfield investment, it is important that you seek proper advice from a local expert with knowledge of your industry and Indian laws and regulations.

Purchasing land for a factory in India

If a greenfield investment is chosen, the establishment of its own production site, a suitable piece of land can be sought based on the result of the site analysis.

This was always a considerable challenge in India, but the Indian government is working hard to make industrial zoned land available making the search less time consuming these days. Still, it is very wise not to have a hard deadline for finding a suitable plot as it generally takes more time than expected.

In addition, the price of lots in clusters and other popular destinations can be high, making European companies decide to specifically look for cheap land. Watch out for this; there can be very nasty snags in this.

Often in these types of deals, it is said that the land has an industrial destination, but this is not the case. If a lot is purchased that later turns out to be agricultural or private zoning, it is almost impossible to get it changed and another option will have to be sought.

We therefore recommend that you look specifically for industrial lots offered by the government. Finding suitable options listens closely in India and help from a local expert in this field is therefore not a luxury.

Prepare well for setting up your production in India

Many of our clients, before making the decision to set up production in India, want to have a good understanding of what is involved in setting up a production site in India. IndiaConnected has therefore compiled all the tips and advice in a special guide on setting up your own production site in India or finding the right Indian manufacturing partner.

Outsourcing production to an Indian party - here's how to find the right partner

India has become one of the world's leading manufacturing centers in the past decade. The Indian government has invested heavily in developing the industrial sector with the result that India's automotive, aerospace, IT and pharmaceutical (think vaccines) sectors now produce for the entire world. In addition, India offers access to a wide availability of raw materials and costs are lower than in China. The country therefore offers a lot of interesting opportunities for European companies looking to outsource their production.

Finding the right production site in India

Many companies see India as one country, but India is incredibly large and diverse. India is better approached as a continent, like Europe. Therefore, to find a good producer, it is smart to do or have a thorough location analysis done. India has manufacturing clusters in which companies of a specific sector are located. Several clusters of each sector exist in the states where the best materials, infrastructure and personnel can be found for this industry. For example, the auto industry has four major clusters in Gujarat and around the cities of Chennai, Pune and New Delhi.

Companies should not focus on these clusters, but look at all options across India. Sometimes the options outside these clusters are more advantageous because, for example, wages are lower outside the cities. Once it is determined which locations meet the needs, a list of potential suppliers and manufacturers in these regions can be made.

An Indian partner with experience

To ensure the desired specifications and quality, a potential supplier must have the right expertise and experience within the sector in which the European company operates. It is also necessary to check whether quality systems are in place, what the annual output is and whether the supplier has enough experience in exporting the product.

If you have little experience doing business in India, it is advisable to hire a local consultant for this step. They know exactly what legal requirements products must meet and what permits are needed to produce and ship your products.

Quality control

From the list of potential candidates, after extensive evaluation, the three to five best options for the industry and product are chosen. With these producers, the European company then goes deeper into the opportunities offered by the producer. In this step, it is advisable to schedule a visit to the production facility, or, if a visit is not possible, to organize a video call to get an even better idea of the process and quality of the products manufactured there. Once the selection is narrowed down to 1 manufacturing company, a quote can be requested so that price and terms can be negotiated.

Keep in mind that a factory in India usually looks different than in Europe. This does not mean that the products being delivered are also of inferior quality. Often factories in India are more simply furnished, and there is no air conditioning, for example, but the machines are of the same caliber as in Europe.

Once there is agreement with the manufacturer on the price and terms, samples can be made. The key here is that the European company has people available in India who can check the manufacturing process and quality before it is checked again in Europe.

If everything is satisfactory, the first batch can be manufactured. Even though the new supplier has already been screened in various ways, it is then advisable to have quality control checks done every year or even more frequently.

Protecting your Intellectual Property

When outsourcing your manufacturing to a partner in another country, you want to make sure your intellectual property (IP) is well protected. India has been a member of WIPO (World Intellectual Property Organization) for nearly 50 years, which means that most intellectual property laws in India meet international standards.

In our IP manual, you will read not only how your intellectual property is legally protected in India, but also what you can do and have documented yourself to protect your IP if you will be working with an Indian partner.