Rising Infrastructure projects in India push demand for Door Locks (HSCode 830140)
12% More exports from Australia to India for door locks (HS Code 830140)
As per the trade data available on Ekport, there was 12% more exports to India for HS Code 830140 which includes products categorised as “Other Locks” which has no single classification. Products under HS Code 830140 are sub categorised as combination locks, clasps and frames with clasps which come with locks. The local Indian regulation, tax, custom duty, policy enforcement and Indian authority further bifurcates / classifies the products under HS Code 830140 using an 8-digit ITC Code. Exports to India for HS Code 830140 was USD 41.9 Million during Year 1 (Mar 2016-Feb 2017) and it increased to USD 46.7 Million in Year 2 (Mar 2017-Feb 2018)
Graph1: Global exports to India for HS Code 830140 (door locks) in USD Million.
The above chart shows the year-on year comparison for global exports to India for HS Code 830140 during Year 1 (Mar 2016- Feb 2017) and Year 2 (Mar 2017 Feb 2018). From Graph1 it can be seen that exports to India have increased at a steady pace in Year 2 in comparison to Year 1 and in the months of April it increased by 31%, November by 35% and February by 38%. A major reason for this steady increase for exports of locks which includes combination locks and clasps with frames containing locks, is that once a flourishing lock industry in Aligarh, India during the era of the Mughal’s which accounted over 95% of the lock market has reached a deadlock as a result of its late approach towards new technology and innovation changes in the lock industry. Traditionally India had locks that were handmade with keys separate, failure to adopt automation in the lock industry, traditional locks have now become a dying art. Domestic manufacturing of lock industry are facing several challenges such as lack of technical know-how, no specialised training centres to train people for new skills and shortage of labour. Fluctuating prices of metals such as Zinc, Brass and Copper which are important raw materials used to make locks are putting pressure on margins for traders on rising costs to continue production. The Ministry of Small Scale industry of India did not give priority to the lock industry which is largely an unorganised sector. No benefit of input tax, long bureaucratic procedure just to get manufacturing date on the packaging requires several inspections and negligence in areas of distribution ,automation, availability of manpower and market intelligence for product design were identified by the ministry only on paper, are contributing factors for its lackluster local performance of the lock industry. Introduction of the land acquisition bill and booming real estate sector in India with rapid infrastructure development projects carried out in cities like Bangalore, Delhi and Kolkata have resulted in emergence of residential, commercial and industrial door lock security solutions. Combination locks for homes and personal use, electronic locks, finger scan security solutions have witnessed an increase in demand as a result of increasing security concerns among the Indian population due to criminal and burglary activities on the rise. All the above factors caused an increase in exports of products under HS Code 830140 to India.
Indian Trade Classification for products under HS Code 830140
As per the International Harmonized System, for HS Code 830140 which includes products categorised as “Other Locks” has no single classification. Products under HS Code 830140 are sub categorised as combination locks, clasps and frames with clasps that come with locks, parts separately and keys separately. The local Indian regulation, tax, custom duty, policy enforcement and Indian authority further bifurcates / classifies the products under HS Code 830140 using an 8-digit ITC Code.For example: Combination Locks (ITC Code 830140 10), Clasps and frames with clasps with lock (ITC Code 830150 00), Parts (ITC Code 830160 00), Keys presented separately (ITC Code 83170 00) and products which are not classified but are clubbed as “other” (ITC Code 830140 90). These HS Codes together amounted to USD 46.7 Million worth of India’s Imports during Year 2 which indicates a steady demand for HS Code 830140 in India.
Top 5 Countries doing more exports to India for HS Code 830140
Increasing market demand for mechanical and smart door lock security solutions in India has opened opportunities for many new and existing exporting countries to make their presence felt with more exports to India to for its increasing demand for security and door lock products. The top 5 countries that do more exports to India for HS Code 830140 are China (USD 28.5 Million) USA (USD 6.1 Million), Korea RP (USD 2 Million), Germany (USD 1.8 Million) and Taiwan (USD 1.6 Million). The collective amount of exports from the top 5 countries is USD 40 Million which is 85% of total exports to India in year 2 alone. Though Australia is not amongst the top 5 exporters for this product, it is increasing its exports to India at one of the fastest rates compared to new exporters to India.
Australia’s peer group doing more exports to India for HS Code 830140
At Ekport, we have analysed countries like Australia, who have done less than USD 100K exports to India for HS Code 830140 in Year 1, but have significantly increased their exports during Year 2.
Graph2: Exports to India for HS Code 830140 (door locks) by countries with exports less than USD 100K
Graph2 shows the countries that did less than USD 100K of exports of HS Code 830140 to India during Year 1. It can be observed that all the countries in Graph2 have done more exports to India for HS Code 830140 during Year 2. Graph2 shows that Poland, Greece and Australia, lead the list followed by Switzerland and Sri Lanka. Australia’s increase in exports to India for HS Code 830140 was 124%, which was one of the more significant increases in its peer group.
Graph3: Increase in exports to India for HS Code 830140 (door locks) by countries with exports less than USD 100K
Graph3 clearly shows that Poland, Greece and Switzerland are top exporting countries to India followed by Australia and Sri Lanka. The collective increase in exports to India amounts to USD 518.5K for Year 2 in comparison to Year 1. We consider that amongst its peers, Australia is amongst the new exporters who have the potential to become one of the strongest exporters of HS Code 830140 to India. The products offered by Greece, Sri Lanka and Switzerland, are in the range of USD 4-15 per nos whereas products of Australia is priced at USD 92 per nos and products of Poland is priced at USD 42 per nos. This data shows that Australia and Poland are able to tap the segment of Indian market that values higher quality product enough to pay a premium for it. Australian products are renowned for their superior quality all over the world and has played a significant role in exports of HS Code 830140 to India. Locks from Australia comply to Australian door lock standard AS145 which are highly durable, anti-corrosive and fire resistant which ensure security in your neighbourhood. The costs associated to manufacturing locks in Australia are low compared to India and China as technical skill set and availability of manpower are responsible for its success, Lockwood Australia is backed by Assa Abloy for this major success. Government of India, introduced the land acquisition bill to speed up the process for development of smart cities, rising investments in infrastructure facilities would result an increase for mechanical and smart door lock solutions. Growing internet penetration, growth of e- commerce platforms such as Amazon and Flipkart has enabled opportunities for exporters to reach a wider audience for their products. Architectural Hardware Industry Association (AHIA), Australian Security Industry Association Limited (ASIAL) and Master Locksmiths Association (MLA) should address the steps introduced by the Indian government which boosts infrastructure facilities within the country and allow more export opportunities for products under HS Code 830140.
What are the duties and taxes applicable for products under HS Code 830140?
The import customs and duties play a major role for exporters to export their products globally, because at the end, the final price of the product with duties and taxes decide whether the product is affordable for the target audience or not. For HS Code 830140 the Basic Custom Duty (BCD) is 10%. The indirect tax, known as Goods & Services Tax (GST) will be levied in a similar way it is applicable for all other domestic goods in India. Currently the GST rate is 18% of (AV+BCD+SCD) where AV= Assessed Value
For example, if the product’s Assessed Value (AV) is USD 100,000
Basic Customs Duty (BCD) 10% of (AV) = USD 10,000
Special Customs Duty (SCD) 10% of (BCD) = USD 1,000
GST = 18% (AV+BCD+SCD) 18% of (100,000 + 10,000 + 1,000) = USD 30,980
Total Amount after paying customs duty and GST will be USD 130,980 and the total effective duty applicable on products under HS Code 830140 is 30.98%.
Who is importing products under HS Code 830140?
The increasing amount of infrastructure development projects undertaking in major cities like Bangalore, Delhi, and Kolkata to build smart homes has resulted in increasing demand for combination locks, smart door lock systems and necessary products that fall under HS Code 830140. As per Ekport lead generator companies that import products under HS Code 830140 are Kinglong Hardware from Bangalore, Lamir from Bangalore, Stark Metals Inc. from Uttar Pradesh and Surya Business Associates from Tamil Nadu are some of India’s major importers/buyers in India.