Chapter-6. Quality Control and Pre-Shipment Inspection

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1 Chapter-6 Introduction With the establishment of the World Trade Organisation in 1995 and implementation of Agreement on sanitary and Phyto-sanitary (SPS) measures, countries all over the world started enforcing stricter measures to protect health and safety of their consumers by introducing regulatory import controls, especially in the food sector. Introduction of regulatory import controls has been causing problems to the Indian exporters in terms of multiple inspection, rejections and recall/ destruction of consignments not conforming to their requirements. This has made the role of Export Inspection Council (EIC) and Export Inspection Agencies (EIAs) more relevant in the context of India s efforts to set ambitious export targets and to achieve them. 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 29 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. 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. In the changing Global Scenario, 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 continues to be mandatory in the areas of fish & fishery products, milk products, poultry products, egg products, meat & meat products and honey. The EIAs also continue to certify other notified products such as basmati rice, black pepper etc and non notified products such as Coir Pith, Tea, and Auto Parts etc. Steps were taken to bring some more areas/products under the certification regime of EIC. These included products such as crushed bones, gelatin, animal feeds and casing 91

2 Annual Report Residue Monitoring Implementation of Residue Monitoring continued to be an important area. Residue Monitoring Plans were implemented in dairy, honey, poultry and egg sectors. During , a total number of 356 samples were tested. During April-Dec 2011, 233 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 schemes. A total of thirteen schemes were operated by the EIC / EIAs during the year During the year two new preferential tariff schemes, namely India Malaysia CECA and India Japan CEPA became operational effective 1 st July 2011 and 1 st August 2011 respectively. As on date, EIC / EIAs are issuing preferential certificates of origin under the following 15 schemes. 1 Generalized System of Preferences 2 Global System of Trade Preferences 3 Asia Pacific Trade Agreement 4 SAARC Preferential Trading Arrangement 5 FTA between India and Sri Lanka 6 India Afghanistan FTA 7 India Thailand FTA 8 India Singapore Comprehensive Economic Cooperation Agreement 9. South Asian Free Trade Area 10. PTA with Chile 11. India MERCOSUR PTA 12. India Korea CEPA 13. ASEAN India FTA 14. India Malaysia CECA 15. India Japan CEPA Whereas for the year , the EIAs issued 11,04,111 preferential tariff certificates under various Preferential Tariff Schemes, during April- Dec 2011, the number of certificates issued by the EIAs under various preferential tariff schemes stood at 7,99,654. Strengthening Laboratory Capabilities EIC is also concentrating on strengthening of its laboratory capabilities. The laboratories at Mumbai, Kochi, Chennai and Kolkata were upgraded with new equipment. Strengthening Manpower EIC continued its efforts to train both the internal manpower as well as have Awareness programme for the industry. Till March 2011, 5 programme were held for internal manpower in which 112 persons were given exposure. The basic areas which were covered included certificate of origin, dairy products, fish & fishery products, HACCP, computerization, laboratory testing etc. Following major activities were undertaken in the field of Human Resource during the year: Approx. 75 officers from EIC/EIAs and other government departments participated in the training programme held on Sustained Training Mission on EU Rapid Alert System for Food and Feed (RASSF) in India. Training on validation as per 657/2002/EC was imparted to about 50 lab officials of EIAs/govt./ private laboratories. An awareness programme on Food Safety & Quality was conducted in association with Quality Council of India and Ministry of Food Processing on 28 October 2010 at Porbandar. About 100 participants from Jamnagar, Rajkot, Porbandar, Veraval and nearby areas attended this programme, which was inaugurated by the Director, EIC. A 3-Day Training Programme on Awareness & Internal Auditing as per ISO 9001 : 2008 was 92

3 CHAPTER-6 held in EIC during 27 February 1 March The programme which was conducted by M/s Systems & Training, Mumbai was attended by 12 officers from EIC/EIA-Delhi. It was an effort to sharpen the auditing skills of the internal auditors so that effectiveness of the internal audit process could be enhanced. One day awareness programme on Certificate of Origin was organized for exporters by EIA- Delhi in Feb 2011 at New Delhi. Computerisation and Modernisation New Project initiative: A new project for complete digital issuance of Certificate of Origin (CoO) under various schemes has also been taken up by the department on the complete managed hosting concept. Through this system, all types of CoO would be issued online as well as all related fee for CoO could be paid online through various possible payment modes. This system would have more facility as compared to the existing system for issuance of CoO under various schemes and will be more user-friendly. The process of selecting the new vendor for this activity was initiated in June 2010 but since due to unavoidable reasons the process could not make a headway, it has been re-initiated in the month of March The review of the Server level infrastructure was also carried out as the whole infrastructure deployed in year for running the current Integrated Computerization Project (ICP) application has become obsolete and out of support from the Original Equipment Manufacturer (OEM). As this application is critical and is providing services to the exporters; in order to ensure its smooth running till the time the new vendor is selected, the present service provider was asked for the managed hosting so that without procuring new hardware and software, the present application can be run on rented model (managed hosting). Agreement with M/s PCS was renewed up to the 31st July 2011 to support the Facility Management Services. Under this agreement, M/s PCS maintain the IT-Infrastructures at EIC, EIAs and their sub-offices including website management, provide Data Entry Operators and Resident Engineers for the smooth functioning of the offices. To establish a new & better way of communication among the offices of EIC/ EIAs and with the stakeholders/customers 100 Google Apps Ids were provided to EIC, EIAs and their sub-offices. Senior officers at EIC level were also provided latest laptops with internet connectivity so that they can be contacted while being on tour/movement. This initiative has been taken by keeping in mind the manpower shortage in the organization. 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 electrical and electronics sector was further streamlined. The status of the existing MoUs/ MRAs/ Recognition Agreements is given in Table

4 Annual Report Table 6.1 Existing Agreements/Recognitions on EIC certification Country Products Covered Year of Agreement/ Recognition USA Black Pepper 1988 European Commission Fish & Fishery Products, Basmati Rice 1997 Korea Turkey Singapore Frozen marine products, processed spice goods, processed nuts, tea, honey, jam, preserved goods, sauce, sugar syrup, edible oil and fats Food products, food packaging materials and stainless steel utensils Food & agriculture (egg products, dairy products, drinking water), Electric & electronic products, Telecommunication equipments and Drugs & Pharmaceuticals Japan Poultry & marine products 2005 Italy Marine sector (Technical cooperation) 2005 China Iron ore (under renewal) 2006 Saudi Arabia Fish and Fishery Products 2008 Russia Fish and Fishery Products 2009 Vietnam Products of Animal & Plant origin 2011 China Animal feed ingredients oil cakes Exports The value of exports certified by the EIAs during the year was ` 13, crore. During April- Dec 2011, the value of exports certified by the EIAs was ` crore as given in Table 6.2 : The EIAs have also been authorised to issue various types of certificates for consignments exported such as Health, Authenticity, Non-Genetically Modified Organism, etc. 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 Table 6.2 Products Certified for Exports during April Dec 2011 Group/Product Name Value of product certified (` crore ) Fish & Fishery Products Basmati Rice Black Pepper Egg products Milk & Milk Products Poultry Honey Chemical & Allied products Engineering Others Schemes Total Source: Department of Commerce 94

5 CHAPTER-6 certification. Testing is mostly carried out for samples collected for the purpose of inspection & certification and are generally not charged separately, while some amount of samples are tested for other government departments and industry on cost basis. The total revenue generated in by the organization was to the tune of `63.23 crore. The revenue realized between April-Dec 2011 is ` crore. The break-up of actual fees realised under various schemes and activities during April-Dec 2011 is given in Table 6. 3 below: Table 6.3 Revenues (` in lakhs) Schemes/ Activities Actual Fees Realized till 31 Dec 2011 Inspection & certification Fish & Fishery Products Basmati Rice Black Pepper Egg products Milk & Milk Products Poultry 6.11 Honey Chemical & Allied products Engineering Other Schemes Total from Inspection Certification Certificate of Origin Other Income Total Source: Department of Commerce 95