Quality Control and India’s Manufacturing Growth

UPSC Syllabus: Gs Paper 3- Indian economy

Introduction

India is seeking to expand manufacturing, deepen global value-chain integration and improve the competitiveness of Indian firms. Quality Control Orders (QCOs) have become an important regulatory tool for improving product safety, reliability and manufacturing standards. However, their rapid expansion has also raised concerns about certification costs, input availability, supply-chain disruptions and MSME viability. The policy challenge is therefore to maintain quality standards while ensuring that regulation does not weaken manufacturing scale, efficiency, value addition and international competitiveness.

Evolution of QCOs: From Quality Assurance to Industrial Regulation

1.     Meaning: A Quality Control Order (QCO) is a government order that makes compliance with specified Indian Standards mandatory for selected products.
2.     Purpose: QCOs aim to ensure product safety, performance and reliability, while protecting consumers and improving manufacturing quality.
3.     Legal foundation: QCOs were introduced under the BIS Act, 2016 to ensure safety, performance and reliability of products sold in India.
4.     Rapid expansion: QCO coverage increased sharply from 88 products in 2019 to 765 products by December 2024, expanding their industrial significance.
5.     Wider sectoral coverage: More than 700 QCOs now cover nearly 100 sectors, including toys, steel, chemicals, textiles, electronics and industrial inputs.
6.     Shift towards industrial policy: QCOs have moved beyond targeted quality assurance and now influence manufacturing, imports, investment and India’s wider industrial strategy.
7.     Protection against low-quality products: Mandatory standards aim to reduce exposure to low-quality imports while encouraging domestic manufacturers to improve their production practices.

Importance of QCOs for Manufacturing Competitiveness

1.     Consumer protection: Mandatory standards help ensure that products meet prescribed requirements for safety, performance and reliability, protecting consumers from inferior products.
2.     Higher manufacturing quality: Quality requirements encourage firms to upgrade production practices and improve the reliability of products manufactured for domestic and international markets.
3.     Fairer competition: Common quality requirements can reduce competition based mainly on inferior standards and encourage manufacturers to compete through better-quality products.
4.     Industrial upgrading: Stronger standards can support manufacturing improvement by pushing firms towards better production practices and greater attention to product quality.
5.     Global competitiveness: Indian products need to become safer, more reliable and competitive if India is to expand its presence in international manufacturing markets.
6.     Scale as the wider objective: For Viksit Bharat 2047, quality regulation must improve standards while allowing Indian manufacturing to achieve greater scale, efficiency and competitiveness.

Major Concerns and Challenges of QCOs

1.     Certification burden: Domestic and foreign producers must obtain BIS certification, which can involve inspections, testing, documentation and procedures that may take several months.
2.     Foreign supplier difficulties: Overseas manufacturers have raised concerns about limited acceptance of internationally accredited testing reports, creating additional testing costs and approval delays.
3.     Intermediate-input bottlenecks: Extending QCOs to raw materials and intermediate goods can restrict access to inputs and create disruptions across downstream manufacturing networks.
4.     Steel-sector disruption: Certification requirements for steel intermediates created uncertainty for importers and downstream manufacturers, while shipments faced compliance difficulties and possible supply shortages.
5.     MSME vulnerability: Smaller firms face greater pressure because they often have limited compliance capacity and less ability to absorb certification and input costs.
6.     Firm-level impact: Chemical-using firms faced different outcomes by size, with larger firms seeing 9.6% higher production but 37% lower GVA, while smaller firms experienced a 47.6% fall in profitability.

QCOs and India’s Global Value-Chain Integration

1.     Input-side exposure: Chemical products under QCOs increased to 52 by 2024, while firms exposed to input-side regulation rose from 11.8% in 2019 to 56.6%.
2.     Downstream linkages: Chemicals serve industries such as rubber, plastics, pharmaceuticals and electronics, so input regulations can affect several manufacturing sectors.
3.     Investment decisions: Companies consider regulatory predictability alongside production costs, infrastructure and market size when deciding where to manufacture and source components.
4.     Trade-partner concerns: During the WTO’s eighth Trade Policy Review in July 2026, QCOs and other non-tariff barriers were raised by the EU, US, Brazil, China and Indonesia.
5.     Global supply-chain participation: Efficient and predictable certification systems are important for India’s efforts to attract investment, expand exports and become a reliable manufacturing partner.

Government’s Recent Response and QCO Reassessment

1.     Slower expansion: The pace of QCO expansion slowed considerably towards the end of 2025, reflecting a change in the government’s regulatory approach.
2.     Revocation and suspension: Several QCOs were revoked or suspended, particularly those covering intermediate goods, because of concerns about input availability, costs and supply-chain disruptions.
3.     Pending reassessment: More than 600 QCO-covered products still require reassessment, including important inputs used in chemicals, steel, textiles, machinery, electronics, rubber and plastics.
4. Transition Facilitation Order: DPIIT notified the Transition Facilitation (Quality Control) Order, 2026 on June 25, 2026 to ease certification-related regulatory bottlenecks.
5.     Temporary sourcing flexibility: Eligible firms facing difficulty obtaining BIS Scheme-I certification can temporarily source specified products from BIS Scheme-II licensed suppliers in sectors including toys, footwear and air conditioners.
6.     Controlled access: Firms can use the transition mechanism only after meeting prescribed eligibility conditions and receiving approval from a committee constituted by DPIIT.

Way Forward

1.     Prioritise intermediate goods: The next phase of QCO reassessment should focus especially on intermediate inputs because their regulation can affect several downstream manufacturing sectors.
2.     Assess wider effects: QCOs should be assessed not only for product quality but also for input availability, costs, competitiveness and domestic value addition.
3.     Support MSMEs: Smaller firms need dedicated assistance to meet certification and compliance requirements and manage the additional costs created by mandatory standards.
4.     Use transition periods: Appropriate exemptions or transition periods can help firms adjust where immediate compliance creates particularly high costs or supply difficulties.
5.     Improve certification efficiency: Conformity assessment should avoid unnecessary duplication, particularly where equivalent internationally accepted testing practices are available.
6.     Strengthen predictability: Regulatory implementation should provide adequate preparation time, clear procedures and administrative readiness so that manufacturers can adjust without sudden disruptions.

Conclusion

India needs strong quality standards, but QCOs must support manufacturing rather than constrain it. Their effectiveness should be assessed through quality improvement alongside input availability, value addition, efficiency and competitiveness. A proportionate and predictable framework, with suitable transition support for MSMEs, can help India strengthen product standards while expanding manufacturing scale and deeper integration into global value chains.

Question for practice:

Examine the role of Quality Control Orders (QCOs) in strengthening India’s manufacturing competitiveness while addressing concerns related to costs, supply chains and MSMEs.

Source: The Hindu