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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. 

 

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.

 

Differences in the way of doing business among Indian states

 

India is almost as large as the European Union and has more than twice as many inhabitants. No wonder, then, that there are major differences between the various Indian states in terms of language, demographics, politics and economic growth. For a successful start-up in India, it is therefore important to take these differences into account when drawing up a business plan. Because what works in Gujarat does not automatically work in West Bengal.

Image via Harvard Business Review

Image via Harvard Business Review

The regional differences among Indian states

For a European company to succeed in India, you must be aware of the country's vast regional differences. India is a fragmented market with large, and often underestimated, regional differences in language, culture, infrastructure and wealth, all of which affect the regional business culture.

Indian states are therefore better compared to individual countries than to, say, the Dutch provinces. Indeed, India's most populous state, Uttar Pradesh, has as many inhabitants as Brazil, and the southern state of Tamil Nadu has an economy as large as that of Hungary. 

There are also large demographic differences between Indian states. For example, southern India is older, has more to spend and is more educated than the rest of the country. Northern India, on the other hand, is younger and relatively poor.

North Indians primarily speak Hindi, while South Indians prefer to communicate in English or in their regional state language, such as Kannada or Malayalam. The German wholesaler METRO, better known in the Netherlands as Makro, found out after their start in India that there are big differences between the groceries that customers in a certain region put in their shopping cart and adjusted the assortment accordingly by adding more local products. Logical really, Finns also have different preferences than Spaniards.

"METRO found out that there are big differences between the groceries that customers in different regions in India put in their shopping cart."
- Mark Alexander Friedrich, Head of International Affairs for METRO

Do not make one business plan for all of India

For a successful start in India, thorough market research is a must. Regional differences are not only obstacles, but can also work in your favor depending on your sector and product.

The southwestern states, such as Maharashtra and Karnataka, are a suitable base for technical sectors such as automotive, engineering, as well as outsourcing IT and Research & Development teams.

Northern states such as Punjab and Haryana, among others, have thriving agricultural sectors, creating opportunities for food processing and renewable energy industries.

Starting in the right regions is also essential for selling your product in India. European products almost always fall in the highest market segment in India, so it is smart to start in the regions where people have sufficient income and there is real demand for a more exclusive, expensive product.

"Approaching India as one country by working with only one distributor or partner is one of the most common mistakes European companies make in India," says Klaus Maier, CEO of Maier + Vidorno, IndiaConnected's partner in India.

"In Europe, you wouldn't ask an Italian distributor to set up your network in Norway either. An Indian partner or distributor operating in a specific state has a good network only there and will not succeed in successfully expanding sales to other states. Therefore, those who take India seriously start with about four dedicated, local managers or distributors who understand your product and the regional market well. With them, the market can be mapped and the logistics network set up, one of the biggest challenges for international companies in India. In this way, the Indian market can be conquered step by step, successfully." 

Selling successfully in India with the right strategy

For anyone looking to conquer the Indian market, IndiaConnected has put together a special guide in which we offer you insight into the steps to take to successfully start and grow your sales in India.

From preparing your first export shipment to India to setting up a solid after sales service, we guide and advise throughout your India journey.