[Answered] Examine the implications of the abrupt rollback of Quality Control Orders on industrial policy. Critically analyze how hasty and opaque implementation affects mandatory product standards and business confidence.

Introduction

India rolled back over 20 Quality Control Orders (QCOs) in 2025 after imposing nearly 700 since 2017, highlighting concerns that abrupt regulatory shifts undermine industrial policy stability, supply chains, MSMEs and investor confidence.

Implications of Abrupt Rollback of QCOs on Industrial Policy

1. Regulatory whiplash affecting predictability: Industrial policy requires consistency, sequencing and transparency. The sudden removal of QCOs—after years of aggressive expansion—creates a regulatory whiplash, discouraging firms from long-term investment planning. The UNIDO Industrial Competitiveness Report emphasises that stable standards frameworks are essential to building manufacturing capability.
2. Supply chain recalibrations and market instability: Earlier, QCOs distorted markets by restricting access to raw materials (e.g., specialised polymers, synthetic yarns, 1,300 steel grades).
   Now, rollbacks—without transition periods—risk: Dumping of cheap imports, particularly from China, Sudden price crashes for steel, plastics and synthetic fibres. Closure of domestic capital-intensive input producers. This reverses the earlier problem of shortages with the opposite problem of import surges, weakening domestic industry resilience.
3. Undermining of ‘Atmanirbhar Bharat’ industrial ambitions: Mandatory standards were originally meant to: Reduce substandard imports, Improve domestic manufacturing quality. Align Indian products with global value chain (GVC) requirements. Abrupt rollback interrupts this learning curve. Countries like Japan and South Korea used gradual, predictable standardisation as a tool to climb the technological ladder—India risks losing that opportunity.

Impact of Hasty and Opaque Implementation on Mandatory Product Standards

1. Erosion of trust in regulatory institutions: The BIS Act (2017) gave wide powers to ministries, but opaque execution—uneven foreign factory audits, months-long NOC delays—created uncertainty. At ports such as Nhava Sheva and Mundra, imported containers reportedly waited weeks, raising logistics costs. This unpredictability undermines Ease of Doing Business and violates principles of good regulatory governance.
2. Monopoly creation and anti-competitive behaviour: QCO-led supply restrictions earlier enabled a few domestic firms to raise prices above global levels, particularly in steel and plastics.
   Abrupt withdrawal now exposes MSMEs to import shocks without safeguards.
   Such pendulum swings reflect absence of a competition-sensitive regulatory design, harming both producers and consumers.
3. Impact on MSMEs—double jeopardy: MSMEs suffered both during imposition and rollback: Earlier: double certification, high costs, shortages. Now: sudden import competition without tariff or safeguard frameworks. Without sequenced calibration, MSMEs face volatility instead of stability.
4. Lack of consultation weakens democratic policy design: he Rajiv Gauba Committee’s recommendations—revoking 27 QCOs, suspending 112, deferring 69—were not made public, violating principles of: Transparency, Stakeholder participation, Predictability. This contradicts OECD’s “Better Regulation Framework,” widely used by advanced economies.

Way Forward

1. Restrict QCOs to safety-critical and consumer-facing products only.
2. Reform BIS: time-bound approvals, audit transparency, global harmonisation.
3. Improve import surveillance via DGTR real-time alerts.
4. Provide phased transitions, impact assessments and structured consultations.

Conclusion

As Dani Rodrik argues in The Globalization Paradox, effective industrial policy requires stability and transparency. India must replace abrupt regulatory swings with predictable, consultative standards to strengthen competitiveness and business confidence.