Production sites India

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.

Bis registration for foreign companies

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. 

 

Here's how to import capital goods to India inexpensively with the MOOWR scheme

 

European companies operating or wanting to start production in India can use the MOOWR scheme to import (capital) goods to India in a smart and cheaper way. The scheme offers foreign companies the chance to invest in cutting-edge technology, allowing them to optimize their production processes in India and aims to modernize domestic industries. Here's how you, as a European company, can source smart by taking advantage of the MOOWR scheme.

By importing (capital) goods and under the MOOWR scheme European companies can benefit from low import duties and other incentives, making it an attractive way to expand and modernize your manufacturing operations in India.

Read more here about what exactly the MOOWR scheme is and what benefits it offers European companies.

Tax benefits of the MOOWR scheme.

If you use the MOOWR scheme, European companies get a deferral on paying import duties until the goods are cleared for domestic use or export to a subsequent location. The customs process is also relaxed, which means fewer documentation requirements, fewer physical inspections and faster clearance of products. This, of course, reduces administrative and operational costs.

But what makes the scheme especially attractive is the range of goods that can be imported advantageously under the scheme.

Economical sourcing under MOOWR

MOOWR may seem to focus on sourcing capital goods, but the scheme is much broader. Companies can economically source all elements needed for more efficient production, including raw materials, components and intermediate goods.

In addition, the MOOWR scheme also promotes cooperation between foreign companies and Indian suppliers. This cooperation not only facilitates technology transfer and knowledge sharing, but also strengthens the overall ecosystem by stimulating local industries and creating jobs.

Roadmap for sourcing through the MOOWR program

1. Find a suitable bonded warehouse
Find a bonded warehouse that meets your company's needs in terms of location, size and facilities. Consider both government-run and privately-run bonded warehouses in India.

2. Build a relationship with a bonded warehouse
Enter into a formal agreement with the warehouse operator. Obtain necessary licenses and approvals from relevant authorities.

3. Import capital goods
Purchase capital goods from both Indian and international suppliers. Import these goods into bonded warehouse and clear them under MOOWR scheme.

4. Manufacturing and other activities
Manufacture, process, pack and test goods in bonded warehouse. Store goods safely until ready for clearance.

5. Clear goods for domestic consumption or export
If the goods are ready for domestic consumption or export, apply for clearance. Pay deferred import duties at this stage.

Also take advantage of the MOOWR scheme

European companies looking to set up production in India should look into the benefits the MOOWR rulein offers them to get started and to import capital goods in a cost-effective manner.

Curious about the details of the program and how your company too could use this scheme in a smart way?


Shashank Verma

Vice President of Supply Chain Management

This article was written in collaboration with vice president of Supply Chain Management, Shashank Verma.

Verma has over 22 years of experience in establishing business strategies, managing the supply chain of hundreds of European companies, establishing sound logistics in India and other related functions with a focus on revenue growth and profit maximization of organizations.

 

MOOWR scheme: tax breaks for European companies looking to produce in India

 

The Manufacturing or Other Operations in Warehouse Regulations (MOOWR) is a comprehensive set of guidelines published by the Indian government to encourage foreign investment in the country. These regulations offer several benefits to international companies looking to establish manufacturing or assembly units in India. In this article, we list the main benefits of the MOOWR program for European companies.

Easier access to the Indian market

The MOOWR scheme can be an attractive option for international companies looking to enter the Indian market. It gives international companies the option of setting up manufacturing facilities in India in a straightforward manner, reducing their reliance on importing products or semi-finished goods and taking immediate advantage of the many favorable tax schemes available to international companies manufacturing in the country.

Deferral of payment of import duties

Under the MOOWR scheme, international companies can import raw materials, semi-finished and (capital) goods without paying import duties in advance. Import duties need not be paid until the finished goods are exported or sold domestically. The deferred payment of import duties can significantly reduce the initial capital costs for international companies, allowing them to invest more in their production activities during this initial phase.

Streamlined customs procedures

The MOOWR program simplifies customs procedures for importing goods into India for manufacturing or assembly purposes. Fewer documentation requirements apply, fewer physical inspections are required, and products have a faster clearance time. The simplified rules also allow international companies to reduce their administrative burden and operational costs.

Produce quickly and easily

Under the MOOWR scheme, international companies can carry out a wide range of manufacturing and other activities within bonded warehouses, including assembly, processing, packaging and testing. This means that there is no need to set up their own factory immediately, as the scheme allows international companies to lease or rent production sites within existing bonded warehouses or to set up their own bonded warehouse within the existing premises. This flexibility provides European companies with more control over their production processes because they do not necessarily have to outsource to a third party.

Exporting without barriers

MOOWR, unlike other schemes, does not impose specific export obligations when imports are made by the European company to India. This gives international companies more flexibility in their export plans and the ability to target markets where they see the greatest potential for growth and profitability. India's strategic location provides European companies with access not only to Asia, but also to Oceania. By establishing themselves in India through the MOOWR scheme, European companies can expand their reach and tap into new markets.

Find out here how you too can export capital goods to India advantageously under the MOOWR scheme to make your production processes more efficient.

Working together to grow faster in the Indian market

The MOOWR program promotes cooperation between European and Indian companies and creates opportunities for joint ventures, partnerships and knowledge sharing. European companies can benefit from the expertise, market knowledge and local networks of Indian companies, facilitating market entry and long-term expansion. Working together, European companies can gain a better understanding of Indian consumer preferences, cultural nuances and business practices so they can tailor their products and services accordingly.

India is one of the fastest growing economies in the world, and the MOOWR program provides a relatively easy way for European companies to take their first steps into the dynamic Indian market. The MOOWR scheme is attractive to all European companies wishing to set up manufacturing operations in India. Are you curious about the specific benefits for your sector or company?


Shashank Verma

Vice President of Supply Chain Management

This article was written in collaboration with vice president of Supply Chain Management, Shashank Verma.

Verma has over 22 years of experience in establishing business strategies, managing the supply chain of hundreds of European companies, establishing sound logistics in India and other related functions with a focus on revenue growth and profit maximization of organizations.