Understanding and Reforming Quality Control Orders in India's Manufacturing Sector

Understanding Quality Control Orders in India

Quality Control Orders (QCOs) are official mandates by the Indian government ensuring that certain products adhere to prescribed quality standards before they can be produced, imported, or sold. These standards are enforced by the Bureau of Indian Standards (BIS) through rigorous testing, inspection, and certification processes. Recently, the scope of QCOs has expanded to cover raw materials, intermediates, and final products, impacting various economic sectors.

The Rationale Behind QCOs

The primary aim of QCOs is to enhance product quality in the domestic market and protect consumers. They also strive to bolster Indian manufacturing and minimize dependency on inferior imports. The key objectives include:

• Enhancing product reliability and performance domestically.
• Preventing the influx of low-quality imports.
• Aligning local production with international standards.
• Protecting consumers in critical sectors like steel, chemicals, and electronics.

Challenges Faced by the Industry

Despite their intentions, QCOs present several challenges to manufacturers:

• High Compliance Burden: Many QCOs apply to raw materials with minimal risks, increasing costs for businesses, particularly MSMEs.
• Certification Delays: Securing BIS certification often leads to delays due to extensive inspections and paperwork.
• Supply Shortages: Insufficient domestic capacity forces reliance on foreign suppliers, which can disrupt supply chains if certification is delayed.
• Increased Production Costs: Additional expenses arise from testing, approvals, and demurrage charges.
• Impact on Competitiveness: Overregulation can hinder exports, reduce efficiency, and deter investment and innovation.

Government Review and Recommendations

The Gauba Committee (2025) assessed the QCO framework, suggesting significant reforms to lessen regulatory burdens and enhance competitiveness. Key recommendations included:

• Revoking QCOs for raw materials and intermediates.
• Postponing QCOs until adequate domestic capacity exists.
• Adopting voluntary or buyer-driven standards.
• Reforming the inefficient No-Objection Certificate (NOC) system.

The Inefficiency of the NOC System

The prior NOC process resulted in operational bottlenecks for importers and manufacturers. Issues included:

• Multiple approvals from various bodies like the steel ministry, BIS, and Customs.
• Limited recognition of product grades, despite global trade diversity.
• Delays leading to detention charges and canceled orders.
• Increased costs discouraging MSME participation.

The committee ultimately recommended abolishing the NOC system entirely.

Recent Developments and Future Needs

India has recently withdrawn QCOs on 20 key industrial inputs, including textiles, plastics, and metals, to alleviate supply bottlenecks. Despite these steps, further reforms are necessary to ensure QCOs fulfill their purpose without stifling industry growth. Priority areas include:

• Applying QCOs only where safety or environmental protection is essential.
• Implementing predictable, technology-driven approval timelines.
• Expanding testing infrastructure for faster approvals.
• Simplifying compliance processes for MSMEs.
• Establishing a single-window digital platform for efficient application and approval management.