TOPIC : Quality control on exports

An important aspect about the goods to be exported is compulsory quality control and pre-shipment inspection.
Quality control and pre-shipment inspection are prerequisite for exporting goods. Under the Export (Quality Control
and Inspection) Act, 1963, about 1000 commodities under the major group of: Food and Agriculture, Fishery,
Minerals, Organic Chemicals, Rubber Products, Refractories, Ceramic Products, Pesticides, Light Engineering
Steel Product, Jute Products, Coir and Coir Products, Footwear and Footwear Products/Components are subject
to compulsory pre-shipment inspection.

Sometimes overseas buyers lay their own standards/specifications which may or may not be in consonance with
the Indian standards. They may also insist upon inspection by their own nominated agencies. These issues should
be sorted out before confirmation of order.

Specific provision have also been made for compulsory inspection of textile goods. Products having ISI
Certification mark or Agmark are not required to be inspected by any agency. These products do not fall within the
purview of the export inspection agencies network. The Customs Authorities allow shipment of such goods without
inspection certificate, provided they are otherwise satisfied that the goods carry ISI Certification Mark or the
Agmark. For other goods inspection can be made in the following manner:

Consignment to consignment inspection-under this scheme the application (in duplicate) for inspection for goods
has to be submitted well in advance, in the new prescribed form ‘intimation for inspection’, before the expected
date of shipment of the consignment. Inspection of the consignment is generally carried out either at the premises
of the exporter, provided adequate facilities exist therein for inspection, or at the port of shipment.

After satisfying itself that the consignment of exportable goods meets the requirements stipulated in the export
contract/order, the inspection agency issues, generally within four days of receipt of intimation for inspection, the
necessary certificate of inspection to the exporter in the prescribed proforma in five copies.

The certificate is issued in the standardised form which is aligned pre-shipment export document. (Three copies for
exporter, original copy for customs use, the second copy for the use of the foreign buyer and the third copy for the
exporter's use, fourth copy for Data Bank, Export Inspection Council, New Delhi and the fifth copy is retained with
the agency for their own office record).

EXPORT (QUALITY CONTROL & INSPECTION) ACT, 1963:

The Export Inspection Council is responsible for the operation of this Act. Under the Act, a large number of
exportable commodities have been notified for compulsory pre-shipment inspection. The quality control and
inspection of various export products is administered through a network of more than fifty offices located around
major production centres and ports of shipment. In addition, organizations may be recognized as agencies for
inspection and /or quality control. Recently, the government has exempted agriculture and food products, fruit
products and fish and fishery products from compulsory pre-shipment inspections, provided that the exporter has a
firm letter from the overseas buyer stating that the overseas buyer does not require pre-shipment inspection from
official Indian inspection agencies.

In-process quality control and self-certification scheme

IN-PROCESS QUALITY CONTROL:

Certain products like chemicals or engineering goods are subject to this control. The inspection is done at various
stages of production. The exporter has to get his unit registered as "Export worthy" and keep record of processing
and production. Under this system, export is allowed on the basis of adequacy of IPQC and inspection measures
exercised by the manufacturing units themselves. Units approved under this system may themselves issue the
certificate of inspection, but only for the products for which they have been granted IPQC facilities. However, these
units have the option either to get the certificate from the export inspection agencies (EIAs) or issue the same
themselves.

SELF-CERTIFICATION SCHEME:

Large manufacturing/exporters, export houses /trading houses are allowed the facility of self-certification on the
theory that the exporter himself is the best judge of the quality of his products.

The industrial units having proven reputation and adequate testing facilities have to apply to the Director
(Inspection and Quality Control), Export Inspection Council of India, 11th floor, Pragati Tower, 26 Rajendra Place,
New Delhi-110 008. It grants a certificate valid for a period of one year, to allow manufacturers of engineering
products, chemical and allied products and marine products. The approval of an industrial unit under this scheme
is notified in the Gazette of India and the exporter has to pay a lump sum fee to the export inspection agencies
depending upon his export turnover.
Discussion on Quality Control and preshipment inspection will be incomplete without saying a few words about ISO
9000.

The International Organisation for Standardisation (ISO) is the specialised International Agency in formulating the
norms of Standardisation, Presently 91 Countries including India are members of the national Standard Body
Various Technical Committees were formed who looked into and considered the different areas of specialisation
and formulated the International Standard.

Documents required for quality control

There are certain forms and documents that are necessary for quality control and pre-shipment inspection. The
following documents need to be submitted along with the application:

(i) Particulars of the consignment intended to be exported

(ii) A crossed cheque/draft for the amount of requisite inspection fees or an Indian Postal Order.

(iii) Copy of commercial invoice

(iv) Copy of Letter of Credit

(v) Details of packing specifications

(vi) Copy of the export order/contract, indicating inter alia the buyer’s requirement that goods are strictly according
to the prescribed specifications or as per sampl

Re: Documents required for quality control

Dear Editor,

This Article gives very good detail to educate and proves what an institution like TradeIndia.com can contribute to
the development of the Indian Trade with rest of the world and help the members to understand and use their skill
to work, with or without these. I congratulate you on job well done.

It is good base information and it needs inputs from the forum to evolve a system, based on this which can use the
development of e-business and quality control for reducing the copies and paperwork as provided by the last and
best suited in 60s.

Hi Tech hardware industry is very competitive environment, where IN PROCESS QUALITY CONTROL AND
SELF-CERTIFICATION SCHEME is a norm. There the supplies needed from pre-qualified vendors from China or
Taiwan, sent by air, to the point of use anywhere in Eastern Country, can be next door or even, at times, in USA.

From the supplier, the processes, inspection and quality data of the job, including Process Charts, were sent to the
point of use and to the Corporate Materials quality Engineer, electronically, so that the Quality Engineers can
analyze it for various parameters and approve the batch in less than a day or two, to let the parts/assemblies to be
used on the production lines. Generally there was no incoming inspection. From last few years, most of the work
on this transaction is handled paperless through emails and computers, and net meetings.

Some corporation are using SPC and good data collection and analytical methods and well educated to the
process of TQM and even Six Sigma. There is need to expand this knowledge on high priority, if India wants to join
the race and participate in Computer Hardware and even as major Auto Ancillary hub.

Export Inspection Council of India (EIC)

The Export Inspection Council of India (EIC) was set up by the Government of India
under Section 3 of the Export (Quality Control & Inspection) Act, 1963 as an apex
body to provide for sound development of export trade through quality control and
pre-shipment inspection. The Act empowers the Central Government to notify
commodities and their minimum standards for exports, generally international
standards or standards of the importing countries and to set up suitable machinery
for inspection and quality control. The EIC is assisted in its functions by the Export
Inspection Agencies (EIAs) located at Chennai, Kochi, Kolkata, Delhi and Mumbai
having a network of 38 sub-offices and laboratories to back up the pre-shipment
inspection and certification activity. In addition, EIC also designates inspection
agencies and laboratories to supplement its own activities as required. Presently 42
inspection agencies have been designated for inspection of minerals and iron ore and
14 labs for supplementing EIC’s testing for primarily food products. The designation
is done based on international norms namely ISO 17020 and ISO 17025 for
inspection agencies and labs respectively.

The main functions of EIC are (i) to advise the central government regarding
measures to be taken for enforcement of quality control and inspection in relation to
commodities intended for export and (ii) to draw up programmes for quality control
and inspection of commodities for exports.

The inspection and certification activities are carried out through the EIAs following
either a Consignment-wise Inspection or a Systems Approach to include In-process
Quality Control (IPQC), Self-Certification and Food Safety Management Systems
based certification (FSMSC).

In the WTO regime, as India’s trading partners are installing regulatory import
controls, the EIC has re-fashioned its role to develop voluntary certification
programmes besides regulatory export control, especially in food sector. The Council
is seeking recognition for its certification by official import control agencies of its
trading partners, as per provisions of WTO agreements, to facilitate easier access to
their markets for Indian exporters.

Activities and Achievements

Export Certification

Certification continued to be mandatory in the areas of fish & fishery products, dairy
products, poultry products, egg products, meat & meat products and honey. The
EIAs also continued to certify other notified products such as basmati rice, black
pepper, chemicals, footwear, engineering items, etc and non-notified products such
as tea, stainless steel utensils, ceramic, etc. Steps were taken to bring some more
areas/products under the certification regime of EIC. These included products such
as Ayurvedic, Siddha and Unani products; sesame seeds; hops and hop products;
animal feeds and non-basmati rice.

Residue Monitoring

Implementation of Residue Monitoring continued to be an important area. Residue

Monitoring Plans were implemented in the dairy, poultry and egg sectors. During
2006-07, a total number of 363 samples were tested. During April-December 2007,
579 samples have been tested for the entire range of residues relating to pesticides,
antibiotics, heavy metals and other chemicals as required by the European
Commission.
Certificates of Origin

EIC/EIAs continued to issue Certificates of Origin under various preferential tariff

regimes. A total of eight, namely GSP, GSTP, SAPTA, SAFTA, IAPTA, ISFTA, CECA-
Singapore, Early Harvest Scheme under Indo-Thailand has been issued. A new
preferential tariff scheme was introduced under Indo-Chile PTA which was signed in
March 2006 and implemented wef August 2007. During the year 2006-07, the EIAs
issued 9,35,379 preferential tariff certificates under various Preferential Tariff
Schemes. During April- December 2007, 6,73,147 certificates have been issued by
the EIAs under various preferential tariff schemes.

Strengthening Laboratory Capabilities

EIC is also concentrating on strengthening of its laboratory capabilities. The

laboratories at Mumbai, Kochi, Chennai, Bhubaneswar, Veraval and Quilon were
upgraded with new equipment including Atomic Absorption Spectrophotometer
(AAS), High Performance Liquid Chromatography (HPLC), Inductively Coupled
Plasma Mass Spectrometry (ICPMS), Gas Chromatography Mass Spectrometry
(GCMS), Gas Chromatography High Resolution Mass Spectrometry (GCHRMS) etc.
depending on the requirements. In addition, implementation of systems as per ISO
17025 was a focus area and the laboratories at Chennai, Mumbai and Kolkata
continued to strengthen such systems and were assessed for accreditation by
National Accreditation Board for Testing and Calibration Laboratories (NABL). The lab
at Chennai received NABL accreditation wef 17 October 2007 while the lab at Kochi is
already accredited. EIC also has labs at 13 suboffices for doing routine
microbiological and some heavy metal testing. These Sub-office laboratories were
also prepared for implementation of ISO 17025 and basic documents were
developed. A total of 22,590 samples have been tested in EIA Labs till December
2007.

In addition to the EIA laboratories, 14 external laboratories have been designated for
supplementing EIC’s testing for primarily food products with 4 new laboratories being
approved during the year.
Strengthening Manpower

EIC continued its efforts to train both the internal manpower as well as have
Awareness programmes for the industry. Till January 2008, 25 programmes have
been held for internal manpower in which 512 persons were given exposure and 17
programmes were held for industry in which 883 persons were given exposure. The
basic areas covered included Certificate of Origin, dairy products, fish & fishery
products, HACCP, computerisation, laboratory testing etc.

For exporters

• Quality Control of Basmati Rice held from 25-30 July, 2007 at Hyderabad; 11
participants.
• Awareness Programme on HACCP for F&FP Sector held on 13-15 Dec. 2007 at
Mumbai; 37 participants.
• Meeting cum awareness Programme for Sesame Seeds Exporters held on 25
Sept, 2007 at Mumbai; 18 participants.
• Three awareness programme on CoOs for Exporters held from 19 Oct.-10
Dec., 2007 at Mumbai, Kochi and Kolkata; 290 participants.

For internal (EIC/EIA) manpower

• Lead Auditor Course on ISO 22000:2005; 14 participants

• Strengthening the Capacity for International Certification of QMS; 11
participants
• Uncertainty Measurement; 11 participants
• Lead Assessor Training Course on ISO 17020; 24 participants
• Four Sensitization Programmes on AYUS Products; 65 participants
• Three Trainings on ISO 17025; 80 participants
• Two Refresher Training Programme on CoOs ; 44 participants
• Two reorientation Programme on fish and fishery products; 58 participants
• Three Corporate Image Building programmes; 72 participants

EU-India Trade & Investment Development (EU-India TIDP) project

A significant activity carried out during 2007-08 under the EU-India Trade &
Investment Development Programme was augmentation and upgradation in relation
to strengthening laboratories, strengthening the capacities for international quality
management systems certification establishing systems for recognition of inspection
bodies in India to meet international requirements, development of sanitary & phyto-
sanitary measures (SPS) database, automated interpretation of Rules of Origin,
organic certification etc. through 7 Work Packages. Under this activity, 10 study trips
to various countries were organised in which 56 officials of EIC/EIAs participated. In
addition, interactive meetings and awareness programmes with exporters were
organized as per the following details:

• Interactive Meeting with Trade/Exporters under TIDP (Trade Investment

Development Project) held on 2 June, 2007 at Kolkata; 65 participants
• Eight Awareness Programmes for Exporters under EU-India TIDP held from 23
Oct-23 Nov 2007 at Veraval, Kochi, Tuticorin, Chennai, Vizag, Delhi, Mumbai,
Kolkata; 290 participants

Computerisation and Modernisation

Significant progress was also made under the Integrated Computerisation Project
(ICP) initiated since 2002. The laboratory-testing module was fully computerised and
implemented in all EIA Head Offices.

The EIC/EIAs continued with its modernisation programme to give the office a
facelift. Significant progress has been made in the EIA-Kochi building, which is
expected to be completed during the current financial year. The EIA-Delhi was
modernized and is now functioning from the new premises.

Agreements with Other Countries

Continued efforts were made towards entering into Memoranda of Understanding

(MoUs)/ Mutual Recognition Agreements (MRAs)/ Equivalence Agreements with the
major trading partners so that EICs certification is accepted by these countries.
Effective steps were taken towards negotiating agreements with Italy for sesame
seeds, Israel for food & agricultural items, Brazil for fishery products, Malaysia for
groundnuts and Australia for egg products. Further discussions were also held to
enter into similar agreements with Japan, Thailand, Mauritius and Sri Lanka. The
Agreement with Singapore in the electical and electronics sector was further
streamlined. The status of the existing MoUs/ MRAs/ Recognition Agreements is
given in Table below.

Table 8.1
Existing Agreements/Recognitions on EIC certification

Year of Agreement/
Country Products Covered
Recognition
USA Black Pepper 1988
European Fish & Fishery Products, Basmati Rice 1997
Commission
Australia Fish & Fishery Products 2002
Korea Frozen marine products, processed spice 2004
goods, processed nuts, tea, honey, jam,
 preserved goods, sauce, sugar syrup,
edible oil and fats
Food products, food packaging materials
Turkey 2004
and stainless steel utensils
85 products under the Import Inspection
Scheme of Sri Lanka namely milk products,
edible oils, packaged water, preserved
Sri Lanka 2005
food, toiletries, bicycle tyres & tubes, steel
section & wires, electric goods & PVC
cables & cords etc.
Food & agriculture (egg products, dairy
products, drinking water), Electric &
Singapore 2005
electronic products, Telecommunication
equipments and Drugs & Pharmaceuticals
Japan Poultry & marine products 2005
Italy Marine sector (Technical cooperation) 2005
China Iron ore 2006

Exports

The value of exports certified by the EIAs during the year 2006-07 was Rs 7,718.37
crore. During April-December 2007, the value of exports certified by the EIAs was Rs
6544.5 crore as given in Table below.

Table 8.2
Products Certified for Exports

Group/Product Name Value of product certified (Rs crore)

Fish & Fishery Products 5122.44
Basmati Rice 652.52
Black Pepper 297.45
Egg products 89.97
Milk & Milk Products 250.56
Poultry 1.32
Honey 44.58
Chemical & Allied products 41.59
Engineering 29.83
Footwear 1.45
Others Schemes 12.74
Total 6544.52

The EIAs have also been authorised to issue various types of certificates such as
health,authenticity, non-genetically modified organism, etc. for consignments export.
Under the non-genetically modified organism (non-GMO) testing, 1355 consignments
were tested reflecting a quantity of 9.5 lakh metric tonnes.

Fees and Revenue Generation

The basic source of revenue of EIC/EIAs continued to be from monitoring and
inspection fee realized for different notified and non notified products as well as
certification under GSP and other preferential tariff schemes. The fee charged is at a
level of 0.4% of FOB value for products inspected under Consignment wise
inspection, while it is 0.2% of FOB value for products under systems certification.

Testing is mostly carried out for samples collected for the purpose of inspection &
certification and are generally not charged, while some amount of samples are tested
for other government departments and industry on cost basis.

The total revenue generated in 2006-07 by the organization was to the tune of Rs
39.55 crore. The revenue realized between April-December 2007 is Rs 29.17 crore.
The breakup of actual fees realised under various schemes and activities during
April-December 2007 is given in Table 8.3.

Table 8.3

Revenues (Rs. lakh)

The list of EIA laboratories is given in the Annexure.

Annexure

List of EIA Laboratories