Electronic Manufacturing

Electronic Manufacturing and Legal Compliances

The rising disposable income has taken demand of electronic goods in India to unprecedented levels. According to IBEF, Indian appliance and consumer electronics market reached Rs. 76,400 crore (US$ 10.93 billion) in 2019. Appliances and consumer electronics industry is expected to double to reach Rs 1.48 lakh crore (US$ 21.18 billion) by 2025[1].

With increased investments towards electrification, internet and broadband connectivity and strong emphasis to provide government services through the internet, demand for white goods and consumer electronic devices are likely to witness an increased manufacturing and sale of electronic devices in the coming years.

Electronic Devices Manufacturing- Government Schemes India

Indian Government’s flagship schemes of Make in India, Digital India, increasing ease of doing business coupled with high domestic demand of electronic goods has made India an attractive investment destination for electronic manufacturers. Ministry of Electronic and Information Technology’s Phased Manufacturing Programme for mobile phones has led to industry titans like Samsung, Xiaomi, Apple, etc. set up manufacturing plants for key components and assembling phones in India.  

Ministry of Electronics and Information Technology’s National Policy on Electronics 2019[2] envisions to position India as a global hub for Electronics System Design and Manufacturing by encouraging and driving capabilities in the country for developing core components and creating an enabling environment for the industry to compete globally.  As part of the Policy, Production Linked Incentive Scheme[3] was notified on April 01, 2020 which offers an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India by manufacturers of mobile phones and specified electronic components like SMT components, semiconductor devices, PCBs, SIPs, passive components including resistors, capacitors, etc. meeting the proposed criteria, for a period of five (5) years subsequent to the base year as defined. Total incentives of over Rs. 40,000 crores are being offered over the period of 5 years. So far, a total of 22 companies have registered for the PLI scheme, including several global companies and Indian companies[4].

For electronic devices to be manufactured, stored for sale, imported, sold or distributed in India, they need to comply with standards set by the Bureau of International Standards (“BIS”). The BIS checks the quality and standards of the products from the point of view of health, safety, environment, prevention of deceptive practices, consumer security etc. Akin to CE marking that indicates conformity with standards for products sold within the European Economic Area, BIS issues ISI mark.

Also read Bureau of Indian Standards (BIS)- Overview and Importance  

Compulsory Registration Scheme for Electronic Devices

Electronic devices fall under the Compulsory Registration Scheme for “Self declaration of conformity” i.e. the list of Electronics and IT Goods falling under this category need to self-declare that they are in compliance with the prescribed standards [5].

Thus, no person shall manufacture or store for sale, import, sell or distribute goods which do not conform to the standards specified by BIS for manufacture of Electronics and IT Goods. Section 5 of the Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012 states that manufacturers of certain products have to get the samples of product tested at a BIS recognized lab. BIS’Handbook of Information prescribes that to initiate the process of registration, such report along with other documents and a declaration that articles conform to the Indian Standard must be submitted, following which registered manufacturers are allowed to put the Standard Mark notified by the Bureau and sell, market, distribute products in the Indian market.

In 2012, Ministry of Electronics & Information Technology (MeitY) notified “Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012”  for fifteen categories of electronic items or devices that must be compulsorily registered. MeitY added 15 product categories and another 13 product categories under this order in 2014 and 2017 respectively. Further in 2020, 19 new products were included under the Compulsory Registration Scheme through 2 notifications issued in April and October.

In 2017, Ministry of New and Renewal Energy (MNRE) has notified products under Solar Photovoltaics, Systems, Devices and Components Goods (Requirements for Compulsory Registration) Order, 2017 enumerating products that must be compulsorily registered. All products categories that require Compulsory Registration fall under Scheme – II of BIS.

Procedure to obtain registration- Electronic Devices

  • Electronic devices need to comply with the specific Indian Standards that BIS has set in place for that product category. The device must be tested at one of the labs recognised by BIS.
  • Test reports, in original along with other documents must be submitted with application both online and offline.
  • Bureau of Indian Standards then grants licence to the manufacturers to use or apply Standard Mark with unique R-number, through registration based on self-declaration of conformity for goods and articles as per Indian Standards.
  • On obtaining registration, BIS mark must be displayed on the product or packaging in accordance with Marking requirement as per self-declaration of Conformity {Scheme-II of Schedule II of BIS (Conformity Assessment) Regulations, 2018}.

Under Legal Metrology (Packaged Commodities) Rules, 2011 every individual, firm, HUF, society, company or corporation that pre-packs or imports any commodity shall seek registration under under the Rules. Further, the packaging of the product must bear certain declarations on their principal display panel like country of origin, name of product, quantity of product, size, weight, retail sale price (MRP), name and address of the manufacturer, etc. Further these Rules prescribe the size of letters that must be used to make these declarations, the manner in which they appear, etc. These rules must not only be observed by the manufacturer but also the packager in case the two are different.

Also read Legal Metrology Act, 2009 and Packaging and Labelling Laws in India

Thus, companies involved in manufacture of electronic devices must ensure that they are complying with the BIS standards and Legal Metrology Act and Rules as non-compliance may also attract penalties as prescribed under the these Acts and Rules.

Non- Compliance of Rules and Penalties

It would be noteworthy to mention here that minor contraventions and non-compliance of prescribed rules and regulations by manufacturers could lead to the issuance of a show cause notice to the manufacturer, distributors and / or importers by the enforcement authorities, which in turn can lead to the initiation of prosecution against the defaulting company as well as its directors. 

Penalty for manufacture and sale of goods without Standard Mark certification

Section 17 of the Bureau of Indian Standards Act, 2016 prohibits manufacture, import, sale, hire, lease, storage or exhibition of goods without Standard Mark. Contravention of the provision is punishable with imprisonment for a term which may extend up to two years or with fine which shall not be less than two lakh rupees for the first contravention and not be less than five lakh rupees for the second and subsequent contraventions, but may extend up to ten times the value of goods or articles produced or sold or offered to be sold or affixed or applied with a Standard Mark.

Penalty for non-declaration on packaging under legal Metrology Law

Under the Legal Metrology Act, 2009, whoever manufactures, packs, imports, sells, distributes, delivers or otherwise transfers, offers, exposes or possesses for sale, or causes to be sold, distributed, delivered or otherwise transferred, offered, exposed for sale any pre-packaged commodity which does not conform to the declarations on the package as provided in this Act, shall be punished with fine which may extend to twenty-five thousand rupees, for the second offence, with fine which may extend to fifty thousand rupees and for the subsequent offence, with fine which shall not be less than fifty thousand rupees but which may extend to one lakh rupees or with imprisonment for a term which may extend to one year or with both. Under the Packaged Commodity Rules, contravention of any provision is punishable with a fine of Rs 5000.

[1] https://www.ibef.org/industry/consumer-durables-presentation#:~:text=Appliances%20and%20consumer%20electronics%20industry,%24%2065.53%20billion)%20in%20FY19

[2] https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf

[3] https://www.meity.gov.in/writereaddata/files/production_linked_incentive_scheme.pdf

[4] https://www.moneycontrol.com/news/technology/explained-what-is-production-linked-incentive-scheme-5630221.html

[5] https://bis.gov.in/index.php/product-certification/products-under-compulsory-certification/scheme-ii-registration-scheme/

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