Opinion Rollback of quality control orders is good, but don’t make haste

Until 2014, QCOs were marginal in India’s import system. The country relied mainly on tariffs, anti-dumping and safeguard duties to manage import flows. The 2017 Bureau of Indian Standards (BIS) Act changed this dramatically, giving ministries broad discretion to impose mandatory Indian standards. Since then, QCOs have proliferated across consumer goods, industrial materials and capital equipment.

Some were justified on safety grounds — children’s toys, pressure vessels, and domestic appliances. But a striking feature of India’s approach was its decision to extend mandatory quality rules deep into the upstream value chain. About 25 per cent of QCOs covered raw materials and intermediates. Steel QCOs covered more than 1,300 grades. India is an outlier in regulating industrial inputs through mandatory factory-level certification.

This choice created severe unintended consequences.

MSMEs were hit by a double-certification trap: Both final products and every upstream input needed BIS approval. A June 2025 steel ministry order required every supplier to a BIS-certified foreign mill to be certified, too. For example, if a Thai company sold steel coils to an Indonesian mill, the Thai firm also needed BIS approval — otherwise, the Indonesian exporter, who is BIS-certified, couldn’t sell steel to India.

In the plastics industry, QCOs disrupted entire supply chains. India produces only a small share of the specialised polymer grades exporters need, yet foreign suppliers were still required to undergo expensive factory audits. Many refused because India was a tiny market. As imports fell, a few local firms gained significant pricing power, pushing prices above global levels and hurting MSMEs in packaging, auto parts, electricals, and medical devices.

Textiles saw the same fate. QCOs on inputs, fibre, and yarns introduced in 2023 choked imports, raising Indian fibre prices above world prices. Synthetics account for 70 per cent of global apparel trade, but India’s exporters found they could not obtain the exact blends required by international buyers. These QCOs had nothing to do with consumer safety — they choked India’s participation in the fastest-growing segment of the global textile trade.

Implementation failures worsened the problems. The steel ministry’s no-objection certificate (NOC) regime became the worst example of licence raj. Although only 1,376 grades are formally covered by QCOs, NOCs were required for almost all steel imports, including grades not made in India. At ports such as Nhava Sheva and Mundra, containers sat for weeks pending approvals.

Meanwhile, the BIS’s foreign-factory audit system developed a reputation for inconsistency and opacity. Audits were slow, cancellations were frequent, and approvals were uneven: Some foreign suppliers linked to large Indian buyers moved quickly through the system; others waited indefinitely. In some countries, the BIS approved a single mill — effectively granting a monopoly to one Indian importer.

The result was predictable: Shortages, higher costs, unpredictable sourcing, and widespread anger from MSMEs. International criticism also grew. The government appointed a committee chaired by former Cabinet Secretary Rajiv Gauba.

Reportedly, the Committee’s October 2025 report recommended action on 208 QCOs relating to raw materials, intermediates, and capital goods — revoking 27, suspending 112 and deferring 69. It is said to have called for scrapping the steel NOC regime.

This review triggered the withdrawals of QCOs in many sectors — a necessary correction. But did India err in the process? The Gauba report was not made public. There was no industry consultation on it. Large domestic producers were given no transition period. Even though most QCO withdrawals were justified, India has again shifted policy too abruptly.

The risk now is the opposite of the earlier problem: A surge of dumped raw materials, particularly from China. With QCO barriers gone, suppliers with excess inventory may offload stock in India at cut-rate prices. Industrial raw materials are capital-intensive; sudden exposure can trigger closures. This is why reform should have been phased, predictable and transparent. The government should have announced the intent to withdraw QCOs, given industries time to adjust, and simultaneously outlined a protective framework to check predatory imports.

India must now rebuild a credible quality regime around three priorities. First, limit QCOs to genuinely safety-critical or consumer-facing products, and review the remaining that the Gauba Committee did not examine. Review all types of QCOs on steel, many of which promote monopoly behaviour and hurt MSMEs. Second, overhaul BIS processes: Make inspections time-bound, rules uniform, foreign-factory audits rare, and ensure more accredited labs, global standards and mandatory impact assessments, with clear transition periods. Third, monitor imports closely. India needs real-time customs tracking and DGTR alerts to flag price crashes.

The broader lesson is clear. Industrial policy cannot be built on abrupt shifts or opaque implementation. QCOs were misused and needed reform, but their sudden withdrawal without guardrails risks new vulnerabilities. India must replace regulatory swings with institutional discipline, transparency and careful consultation. Only then can it build a quality ecosystem that supports both its large producers and its millions of small manufacturers — and strengthens, rather than weakens, its global competitiveness.

The writer is founder, Global Trade Research Initiative