Quality Without Choke Points: Rationalising Quality Control Orders on Intermediate Inputs

The Lift Line

A standard that improves the product but starves the factory of inputs has not raised quality; it has moved the cost somewhere else.

Why This Editorial Matters for Your Exam

This op-ed brings evidence to a live industrial-policy debate. It links a domestic regulatory instrument (the Quality Control Order) with the WTO rules on technical barriers, with MSME competitiveness, and with India’s manufacturing ambition. It gives an aspirant a ready framework: final goods versus intermediate inputs, and large firms versus small ones.

GS Paper 3: Indian economy and issues relating to growth, development and employment; changes in industrial policy and their effects on industrial growth; effects of liberalisation on the economy. GS Paper 2: Government policies and interventions; important international institutions (WTO).

Background and Context

How a QCO works. Under Section 16 of the Bureau of Indian Standards Act, 2016, the Central Government, after consulting the Bureau of Indian Standards (BIS), may make the use of the Standard Mark compulsory for goods, on grounds such as public interest, protection of human, animal or plant health, environmental safety, prevention of unfair trade practices and national security. The line ministry notifies the QCO. After the deadline, an uncertified product cannot be manufactured, imported, stored or sold in India, whether it is made at home or abroad. BIS is the national standards body under the Ministry of Consumer Affairs, Food and Public Distribution.

Two certification routes named in the op-ed. Under the BIS conformity assessment framework, Scheme-I is product certification, which licenses use of the Standard Mark (the ISI mark), and Scheme-II is the Compulsory Registration Scheme, used mainly for electronics and IT goods.

The expansion and the retreat:

The June 2026 order. It lets eligible firms that face difficulty in obtaining BIS Scheme-I certification source products temporarily from Scheme-II-licensed suppliers in specified sectors such as toys, footwear and air conditioners, subject to eligibility criteria and approval by a committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT).

The Analysis

1. The problem is concentrated in inputs. More than 600 QCO-covered products are yet to be reassessed, including inputs for chemicals, steel, textiles, machinery and electronics, and rubber and plastics. Because these inputs feed many downstream industries, a certification bottleneck upstream spreads costs across the economy.

2. The chemical evidence. A Centre for Social and Economic Progress (CSEP) study tracks firms that use chemicals, which are inputs for rubber and plastics, pharmaceuticals and electronics.

The authors read this as larger firms keeping output up while value addition falls, probably because inputs cost more and part of the cost is passed on in prices. Smaller firms cannot pass costs on or absorb compliance costs, so their profits fall.

3. Trading partners notice. The concerns surfaced at India’s Trade Policy Review not only from the EU and the US but also from Brazil, China and Indonesia, fellow BRICS members. That matters for India’s credibility as it negotiates FTAs and seeks to join global value chains.

4. What the authors propose. Build supply-chain implications into both the design of new QCOs and the review of existing ones; focus the next phase of rationalisation on intermediate goods; and give MSMEs dedicated help to meet certification, with exemptions or transition periods where compliance costs are heaviest.

The precision that earns marks. Distinguish the objective of a QCO (safety, health, fair trade) from its incidence (who bears the cost). A standard on a final consumer good falls on the product the consumer uses; a standard on an intermediate input falls on every firm downstream. That distinction is the heart of this op-ed.

Data and Institutions Vault

Prelims-grade facts:

Legal basis:

• QCOs are issued under Section 16 of the Bureau of Indian Standards Act, 2016, after consulting BIS.
• BIS is India’s national standards body under the Ministry of Consumer Affairs, Food and Public Distribution.
• Scheme-I is BIS product certification (Standard Mark); Scheme-II is the Compulsory Registration Scheme.
• As background, the Transition Facilitation (Quality Control) Order, 2026 was notified by DPIIT on 25 June 2026.

Scale and evidence (as reported by the authors):

• Products under QCOs: 88 in 2019, 765 by December 2024; more than 600 still to be reassessed.
• First QCO on a chemical product: 2018; 52 chemical products covered by 2024.
• CSEP study: larger firms’ GVA fell 37 per cent; smaller firms’ profitability fell 47.6 per cent.

WTO framework:

• The Agreement on Technical Barriers to Trade allows technical regulations for legitimate objectives such as safety and health.
• Members must notify draft technical regulations to the WTO so that others can comment.
• The Trade Policy Review Mechanism reviews members periodically; frequency depends on the share of world trade.

Prelims, the traps:

• A QCO applies to domestic and imported goods alike; it is not an import-only measure.
• BIS sits under Consumer Affairs, not Commerce and Industry, though DPIIT issues many QCOs.
• The TBT Agreement covers technical standards; food safety and plant and animal health fall under the separate SPS Agreement.

⚠️ Watch the trap: A Trade Policy Review is a peer review, not a dispute. It produces no ruling and no remedy; complaints about a measure go to the Dispute Settlement Body.

The Debate

The case for QCOs. Mandatory standards protect consumers from unsafe goods, curb low-quality and dumped imports, and can push domestic producers to upgrade. The government has credited the toys QCO, in force from 2021, with cutting toy imports and helping domestic makers.

The case against their current reach. Applied to inputs, QCOs work like non-tariff barriers against India’s own manufacturers. Certification of foreign plants takes time, testing capacity is limited, and MSMEs bear a disproportionate burden. The result can be lower value addition and less competitive exports, the opposite of the aim.

The balanced verdict. Keep QCOs where safety concerns are real, especially for final consumer goods, and apply a regulatory impact test before extending them to intermediates. Align Indian standards with international ones where possible, so that quality regulation supports integration into global value chains.

How to Think About This

Follow the input down the value chain. Whenever a regulation, tariff or subsidy touches an intermediate good, ask who uses that good next, and whether they can pass the cost on. The same reasoning applies to anti-dumping duties on steel or solar cells, to import curbs on electronics components and to inverted duty structures. A policy that protects one link can weaken every link after it.

Diagram-in-Words

Takeaway Box

• Instrument: QCOs under Section 16 of the BIS Act, 2016; certification mandatory for domestic and imported goods.
• Scale: 88 products (2019) to 765 (December 2024); more than 600 still to be reassessed.
• Evidence (CSEP, chemicals): larger firms’ GVA down 37 per cent; smaller firms’ profitability down 47.6 per cent.
• External pressure: raised at India’s WTO Trade Policy Review in July 2026, including by BRICS partners.
• Way forward: prioritise intermediates, build in supply-chain impact, support MSMEs with time and help.

Sources: The Hindu, Bureau of Indian Standards

Source: Quality Without Choke Points: Rationalising Quality Control Orders on Intermediate Inputs — Ujiyari.com | Free UPSC & State PCS Editorial Analysis