Vishleshan for Regulatory Exams 10th November 2025 | Standards, Not Strangulation: Why India Must Fix Its QCO Framework

All candidates eyeing exams like those of RBI, SEBI, or NABARD will have to stay updated on key economic and regulatory developments. In today’s edition of Vishleshan, we’ll shed light on Standards, Not Strangulation: Why India Must Fix Its QCO Framework. These issues are highly relevant for all the upcoming competitive exams mentioned above. Keep reading to stay ahead with a clear understanding of today’s topic.

Standards, Not Strangulation: Why India Must Fix Its QCO Framework

Context: India’s rapid expansion of Quality Control Orders is strangling MSMEs and supply chains. This article explores the timely recommendation to scrap hundreds of QCOs and adopt a balanced approach that genuinely boosts competitiveness.

Link to the Article: Business Standard

Today’s BS article reports on a significant recommendation by a high-level committee headed by Rajiv Gauba to scrap or defer over 200 Quality Control Orders (QCOs). It argues that this system, originally intended to ensure consumer safety and curb substandard imports, has expanded uncontrollably. Instead of just improving quality, it has morphed into “bureaucratic overreach” and a form of back-door protectionism, creating severe supply-chain bottlenecks and disproportionately harming Micro, Small, and Medium Enterprises (MSMEs). The article calls for a major reform to create a balanced framework that aligns with global standards and focuses on building a credible, efficient quality infrastructure rather than simply restricting imports.

Quality Control Orders (QCOs):

What are Quality Control Orders (QCOs)?

A Quality Control Order (QCO) is a legal directive issued by a concerned ministry of the Government of India that makes compliance with a specific standard, as set by the Bureau of Indian Standards (BIS), mandatory for a product or group of products.

In simple terms, BIS sets thousands of standards, but most are voluntary. A QCO converts a voluntary standard into a compulsory one. Once a QCO is in effect for a product (e.g., toys, footwear, chemicals), that product cannot be manufactured, sold, imported, or stocked in India unless it bears the BIS Standard Mark (commonly known as the ISI mark).

The Legal and Institutional Framework:

• The Governing Act: QCOs are issued under Section 16 of the Bureau of Indian Standards (BIS) Act, 2016. This section empowers the Central Government to make standards mandatory.
• The Responsible Organisation: The Bureau of Indian Standards (BIS) is the National Standards Body of India. Its role is twofold in this process:
  1. Setting Standards: It develops and publishes the Indian Standards (e.g., IS 9873 for toy safety) that are referenced in the QCO.
  2. Enforcing Compliance: BIS runs the Conformity Assessment Schemes. It is responsible for granting licenses to manufacturers, conducting factory audits, testing products, and performing market surveillance to ensure compliance.

The Purpose of QCOs:

The BIS Act does not allow the government to issue QCOs arbitrarily. Section 16 specifies that QCOs can only be issued if the government deems it necessary for one of the following five reasons:

1. In the public interest.
2. For the protection of human, animal, or plant health (consumer safety).
3. For the safety of the environment.
4. For the prevention of unfair trade practices.
5. For national security.

How the QCO Framework Functions

The process of issuing and implementing a QCO involves several key steps:

1. Identification: A government ministry (e.g., the Ministry of Chemicals and Fertilizers) identifies a product that requires mandatory quality standards for one of the reasons listed above.
2. Consultation: The ministry consults with the BIS (to finalize the standard) and with relevant industry stakeholders (manufacturers, consumer groups).
3. Drafting: A draft QCO is prepared and published.
4. WTO Notification: This is a crucial step. The draft must be notified to the World Trade Organization’s (WTO) Committee on Technical Barriers to Trade (TBT). This allows other WTO member countries (who export that product to India) to review the order and submit their comments, typically for a 60-day period. This is to ensure the QCO is not a disguised trade barrier.
5. Issuance & Implementation: After considering stakeholder and WTO feedback, the ministry issues the final QCO with a specific date of enforcement. This usually provides a transition period (e.g., 6-12 months) for the industry to adapt and apply for certification.
6. Compliance: All domestic manufacturers and foreign exporters must apply to BIS for a license. This involves submitting their product for testing in a BIS-approved lab, undergoing a factory audit, and paying a fee to get the license to use the Standard Mark.

Decoding the Article: When Quality Control Becomes a Barrier

The provided article is a sharp critique of how this well-intentioned framework has been implemented in practice. It argues that the “how” and “why” of the QCO regime have become distorted.

The Core Problem: A “Protectionist Wall”

The article’s central thesis is that the QCO framework has expanded from a safety net into a “protectionist wall.” The Rajiv Gauba committee’s recommendation to scrap or defer over 200 orders is the primary evidence of this “bureaucratic overreach.”

The expansion from fewer than 100 products a decade ago to about 800 today is a key data point. The problem was magnified when QCOs were extended beyond finished consumer goods (like toys) to basic raw materials and intermediates (like chemicals or metal components).

A paper by the Centre for Social and Economic Progress (CSEP) provides the critical evidence:

• It analyzed trade data from 2000 to 2023.
• It found that imports of goods covered by QCOs fell by about 24%.
• In contrast, exports of these same goods showed no significant change.

This data exposes the true nature of the problem. If the QCOs were genuinely improving quality, one would expect exports to become more competitive and rise. Since they didn’t, and only imports fell, the CSEP concludes the QCOs have functioned primarily as an import barrier.

The Real-World Impact: Bottlenecks and Burdens

The article explains why this has become a problem. Instead of fostering a quality culture, the system has created severe rigidities.

• For MSMEs: Smaller firms, which operate on thin margins, cannot afford the long delays and high costs of the BIS certification process. It acts as a barrier to their growth and innovation.
• For Supply Chains: When QCOs are placed on raw materials, they restrict access to key intermediates and capital goods. This disrupts the entire supply chain, slowing down production for large industries like metals, chemicals, and textiles, which are noted as being labour-intensive.

The Procedural Failures: Why the System is Broken

The article diagnoses how the framework failed in its execution:

1. Inadequate Testing Infrastructure: India lacks a sufficient number of accredited testing labs. Many QCOs were rolled out before adequate testing capacity was in place, leading to massive backlogs, “long waiting periods, and added costs” for businesses.
2. Limited Stakeholder Engagement: A Chase Advisors survey found a major flaw. While ministries consult firms before the draft, there is very little “meaningful participation” in the post-draft phase. This means practical problems with implementation are ignored. Furthermore, industries are given “little transition time” to adapt.
3. Divergence from Global Norms: India’s domestic standards are often not aligned with global benchmarks like those set by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC). This divergence makes it difficult for Indian products to be accepted internationally and “limits export competitiveness.”

The Path to Reform: “Smarter, Not Lower” Standards

The article concludes by supporting the committee’s recommendation for a “more balanced framework.” The goal is not to lower standards but to apply them rationally. The key reforms needed are:

• Build Capacity: Massively expand the network of accredited testing facilities.
• Improve Efficiency: Decentralise BIS approvals and recognise credible third-party certification (instead of BIS handling everything).
• Enhance Transparency: Create a centralised digital platform that maps all QCOs to their Harmonised System (HS) code (the global standard for classifying traded products), so businesses can easily find and understand their compliance obligations.
• Go Global: Align domestic standards with ISO/IEC benchmarks to ensure Indian goods are “Made in India” and “Accepted Globally.”

In essence, the article calls for a shift in mindset: QCOs should be a tool to build “international manufacturing credibility,” not a weapon to restrict imports.