Rethinking Quality Regulations: What India's QCO Rollback Means For Industry

The Indian government has recently withdrawn a series of Quality Control Orders (QCOs) across multiple industries, marking a shift in its approach to quality regulation.

These QCOs largely covered raw materials, chemical intermediates, synthetic fibres and other industrial inputs that are primarily imported for use in downstream manufacturing.

In an order dated 12 November 2025, the government revoked earlier notifications issued by the Ministry of Chemicals and Fertilizers, which had mandated QCO compliance for several major raw materials, including ethylene glycol, terephthalic acid, polyester spun, grey and white yarns, polyester continuous filament yarn, polyester partially oriented yarn and polyester industrial yarn.

Simultaneously, the Ministry of Mines announced the withdrawal of QCO enforcement for several non-ferrous metals such as primary lead, refined nickel, zinc, copper and tin ingots.

This follows on an earlier decision dated 22 October 2025, when the Department of Chemicals and Petrochemicals revoked six QCOs issued in 2022 covering various fatty acids and their derivatives.

A Shift Based on Gauba Committee Recommendations

These withdrawals align with the inputs provided by the high-level committee chaired by former Cabinet Secretary Rajiv Gauba.

Originally introduced under the Atmanirbhar Bharat initiative, QCOs were meant to curb low-quality imports and raise domestic manufacturing standards. Yet as the scope expanded rapidly across sectors, the results became uneven.

From just 14 QCOs covering 106 products up to 2014, India now has more than 187 QCOs covering over 769 products.

However, this expansion has drawn criticism for causing compliance delays, increasing operational costs and creating production bottlenecks.

Recognising these concerns, the government shifted its attention towards the practical challenges faced by industry under the current QCO regime.

To assess economic impacts and implementation gaps, the Gauba Committee was constituted on 10 August 2025.

The committee since then has held extensive consultations with stakeholders and reviewed how these orders function on the ground.

In its second report, the panel recommended rationalising or phasing the rollout of several QCOs, particularly those affecting raw materials used heavily by micro, small and medium enterprises (MSMEs).

What the Committee Found

As per industry experts, QCOs were intended to improve product quality and consumer safety, but extending them to raw materials has created multiple challenges.

In many cases, the materials placed under QCOs are not produced domestically in sufficient quantities. This has resulted in import shortages, delays and inflated prices. As a consequence, export-oriented sectors such as textiles, footwear and electronics have lost competitiveness.

Further, smaller firms face steep expenses for testing, licensing and inspections, which were worsened by limited laboratory capacity and long lead times.

The committee report highlighted risks arising from inadequate testing infrastructure, short implementation windows and the potential for large-scale supply disruptions if industrial intermediates were suddenly subjected to strict compliance.

As per the report, “Nearly 70 per cent of QCOs introduced in the past five years cover raw materials, intermediates, or capital goods rather than finished consumer products. While this reflects India’s commitment to quality, it has also led to unintended consequences for MSMEs and export-oriented sectors dependent on imported inputs.”

For example, in the case of QCOs on various fatty acids, the dependence on Malaysian raw materials caused shortages and distorted domestic markets.

Similarly, the report shows that QCOs on synthetic fibres and yarns restricted access to essential imported inputs. Industry consultations indicated that these products pose no direct consumer-safety risks, yet mandatory BIS licensing has increased delays, raised procurement costs and pushed many MSMEs to operate below capacity.

For instance, QCOs on Viscose Staple Fibre (VSF) and Polyester Staple Fibre (PSF) limited access to affordable imports in a market dominated by only two major domestic suppliers. Prices rose nearly 20 per cent, forcing many small manufacturers to reduce production or shut operations.

As per the report, “Fibre prices increased 25 to 30 per cent, pushing overall production costs up by almost 50 per cent. Meanwhile, India’s MMF-based exports weakened, while Vietnam’s exports to the US and EU rose by 4 per cent and 6 per cent respectively, highlighting how QCO-induced constraints have eroded India’s global competitiveness.”

The committee similarly recommended reconsidering QCOs on plastics, polymers, base metals, steel products, electronic components, footwear and other intermediate goods.

While supporting quality regulation in principle, the panel emphasised that industrial inputs require a calibrated approach distinct from final consumer products.

Why the Rollback Matters for MSMEs

MSMEs across textiles, engineering, chemicals and consumer goods have broadly welcomed the withdrawal of QCOs. Industry experts say the problem is not the QCOs, the challenges arise when these standards inadvertently create trade barriers for industry.

Vinod Kumar, President, India SME Forum, tells Swarajya, “For the past two years, MSMEs faced rising input prices, testing bottlenecks, BIS delays, and supply shortages. The decision to revoke certain QCOs is timely and corrective.”

One recent example is the March 2025 QCO on steel fasteners, which led to shortages after foreign suppliers found BIS certification too costly and complex. “Even though Directorate General of Trade Remedies (DGTR) investigations found no dumping, MSMEs became reliant on a few domestic suppliers and faced sharp price increases.”

However, several sectors still face significant compliance and supply-chain difficulties, including:

- Speciality chemicals and polymer intermediates used in dyes, agrochemicals and pharmaceuticals

- Electronics components with limited domestic substitutes

- Specific steel grades not produced at scale in India

- Remaining textile or MMF fibre inputs that remain import-dependent

- Packaging resins and plastics critical for food, pharma and FMCG MSMEs

These areas, according to the India SME Forum, require priority reconsideration to avoid production disruptions.

Have QCOs Been Effective So Far?

Until now, the effectiveness of India’s Quality Control Orders has been mixed.

In sectors with adequate testing capacity, such as electrical appliances and certain consumer products, QCOs have helped improve product quality and restrict the entry of substandard imports.

However, the rapid extension of QCOs to raw materials created several challenges, including supply shortages, increased costs and compliance hurdles for MSMEs.

Limited laboratory capacity and a lack of harmonised standards further constrained implementation, contributing to the government’s recent policy reconsideration.

Globally, major developed markets are tightening quality and safety requirements that directly influence India’s export competitiveness, for example Korea’s KC Mark, ASTM standards in the United States and IEC or CE standards in Europe.

The introduction of QCOs was intended to align Indian manufacturers more closely with international norms and to drive large-scale improvements in product and process quality as the country accelerates its manufacturing and industrial expansion.

At the same time, people working closely with the BIS believe that it remains essential for strengthening the BIS.

Although BIS is a founding member of ISO, meaningful engagement with global standards and best practices has grown only recently. This was accelerated by QCO implementation, which exposed auditors to international audit environments and technical benchmarks.

Many Indian industry bodies and organisations such as metro rail corporations and NPCIL continue to rely on IEC, JIS or ASTM standards and often do not accept BIS standards due to technical gaps.

For example, protection against termite damage is mandatory for high-voltage cables under IEC standards, while this requirement is absent in the corresponding BIS specification. Such disparities arise partly from limited international exposure among BIS auditors.

Thus, complete rolling back of QCOs at this stage risks slowing the development of India’s emerging quality ecosystem and may hinder long-term competitiveness.

A New Approach To Quality Control

Industry experts argue that future QCOs should likely be introduced in phases, with longer transition periods and deeper consultation with stakeholders.

They expect that the government should now prioritise mandatory quality standards for products that directly affect consumer safety such as medicines, medical devices, food items, electrical appliances, automotive safety parts and construction steel.

Moreover, given the earlier blanket implementation of QCOs, a crucial next step is to categorise all existing orders into three groups, QCOs that must continue, QCOs that should be paused and QCOs needing further review. This would reduce industry confusion and help prioritise regulatory action.

For lower-risk raw materials and intermediates, compliance could be enabled through supplier declarations or internationally accepted test reports, reducing friction without compromising quality.

Industry stakeholders also point out the need to establish a dedicated QCO Review Unit to assess the economic and operational impact of every proposed QCO before implementation.

In parallel, there is also a demand to digitise the entire compliance process, to reduce paperwork, speed up approvals and support smoother trade.

For instance, although not exactly aligned with the committee’s recommendations, the Ministry of Steel has introduced SARAL SIMS, a simplified registration mechanism under the Steel Import Monitoring System (SIMS).

The initiative aims to improve ease of doing business for small manufacturers and export-linked industries by streamlining import procedures. It is expected to particularly benefit MSMEs, startups and small importers dealing with limited or export-dependent steel consignments.

According to reports, the initiative will come into effect on 21 November 2025. With reduced documentation requirements and a single annual registration, it is being viewed as supporting India’s manufacturing and export ecosystem.

Further, according to the India SME Forum, India should transition to a regime that is risk-based, MSME-sensitive and aligned with global standards, with focus on:

- Avoiding QCOs on upstream intermediates where domestic capacity is inadequate

- Harmonising BIS norms with ISO or IEC standards

- Implementing phased rollouts with wide industry consultation and better coordination with state governments

- Rapidly expanding BIS or NABL testing capacity including regional and mobile labs

- Offering financial support for MSME testing and certification

India’s decision to withdraw several QCOs signals a shift towards a more practical and industry-aware quality framework. The coming phase will test whether policymakers can balance the need for global standards with the realities of domestic manufacturing. A calibrated, risk-based approach that protects consumers without constraining MSMEs will determine how effectively India can build a resilient and competitive quality ecosystem.