Quality control and India’s manufacturing growth

Economy & Foreign Trade · 25 September 2026 · Based on The Hindu (original report)

2-minute summary

India’s aggressive expansion of Quality Control Orders (QCOs) from 88 products in 2019 to 765 by the end of 2024 has faced scrutiny regarding its impact on domestic manufacturing and global supply chains. Concerns over non-tariff barriers were highlighted during the WTO's eighth Trade Policy Review of India in July 2026. While QCOs aim to curb substandard imports and ensure quality, mandatory certification for intermediate goods has caused supply-chain disruptions, higher input costs, and compliance burdens, disproportionately affecting smaller firms' profitability and larger firms' value addition. In response, the government introduced the Transition Facilitation (Quality Control) Order, 2026, through the DPIIT, allowing eligible firms facing BIS Scheme-I certification difficulties to temporarily source from BIS Scheme-II-licensed suppliers in sectors like toys, footwear, and air conditioners. Analysts emphasize that the next phase of QCO rationalization must balance quality standards with industrial scale, competitiveness, and seamless access to critical intermediate inputs.

Why it's in the news

The debate over India's Quality Control Orders (QCOs) has intensified following scrutiny at the WTO's eighth Trade Policy Review in July 2026 and the notification of the Transition Facilitation (Quality Control) Order, 2026, by the DPIIT to ease compliance bottlenecks for intermediate inputs.

Facts to remember

• India's expansion of Quality Control Orders (QCOs) increased from 88 products in 2019 to 765 by the end of 2024.
• The Transition Facilitation (Quality Control) Order, 2026, was introduced through the DPIIT to allow eligible firms facing BIS Scheme-I certification difficulties to temporarily source from BIS Scheme-II-licensed suppliers.
• Quality Control Orders (QCOs) are regulatory instruments issued primarily under the Bureau of Indian Standards (BIS) Act to mandate conformity to specified standards.
• Concerns over non-tariff barriers related to QCOs were highlighted during the WTO's eighth Trade Policy Review of India in July 2026.

Background and context

Quality Control Orders (QCOs) are regulatory instruments issued primarily under the Bureau of Indian Standards (BIS) Act to mandate conformity to specified standards for goods to protect human, animal, or plant health, environmental safety, or prevent deceptive practices. Following the 'Atmanirbhar Bharat' push after 2019, India significantly scaled up QCO coverage to curb cheap, substandard imports—particularly from countries like China—and promote domestic manufacturing. However, as QCOs expanded to intermediate and raw inputs (such as chemicals, steel, and textiles), domestic user industries faced severe input bottlenecks, delayed certification processes, and higher production costs. This friction prompted trading partners to raise concerns at the World Trade Organization (WTO), leading the Indian government to reassess its strategy, revoke or suspend certain input QCOs, and introduce transition facilitation mechanisms.

Government schemes

• Transition Facilitation (Quality Control) Order, 2026 — Eases regulatory bottlenecks by allowing eligible firms facing difficulties with BIS Scheme-I certification to temporarily source from BIS Scheme-II-licensed suppliers in specified sectors.

International organisations

• World Trade Organization (WTO) — Platform where India's trading partners (EU, US, BRICS members) raised concerns regarding India's non-tariff barriers and QCOs during India's eighth Trade Policy Review in July 2026.

Previous UPSC questions on this theme

• Mains GS-3 2023 — Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

Mains practice: Examine the impact of Quality Control Orders (QCOs) on India's manufacturing competitiveness and global value chain integration. Suggest measures to balance quality assurance with ease of doing business.

Introduction:

Quality Control Orders (QCOs) are regulatory instruments implemented to curb substandard imports, ensure consumer safety, and elevate domestic manufacturing standards. However, their rapid expansion to intermediate goods has triggered debates on their net impact on India's industrial competitiveness.

Body:

• Positive Objectives: QCOs prevent dumping of low-grade foreign goods, protect public health and safety, and incentivize domestic firms to upgrade technology and product quality, aligning with the vision of self-reliance.

• Impact on Downstream Industries: Empirical studies show that input QCOs can increase production costs and depress gross value added (GVA) for large firms, while severely eroding the profitability of micro, small, and medium enterprises (MSMEs) due to compliance burdens and input scarcity.

• Global Trade Friction: Aggressive non-tariff barriers have drawn scrutiny at multilateral forums like the WTO, with major trading partners raising concerns that restrictive certification norms can act as disguised protectionism and hinder integration into Global Value Chains (GVCs).

• Recent Policy Adjustments: The introduction of the Transition Facilitation (Quality Control) Order, 2026 by DPIIT reflects a pragmatic shift towards easing regulatory bottlenecks and addressing supply chain disruptions for intermediate inputs.

Conclusion:

To foster robust manufacturing growth, quality standards must be market-driven and calibrated. The path forward requires a sector-specific reassessment of QCOs, phased compliance timelines, strengthening domestic testing infrastructure, and ensuring that intermediate inputs remain accessible and cost-competitive for both large and small manufacturers.

Prelims practice questions

Q1. Consider the following statements regarding Quality Control Orders (QCOs) in India: 1. QCOs are primarily notified under the provisions of the Bureau of Indian Standards (BIS) Act. 2. The Transition Facilitation (Quality Control) Order, 2026 was notified by the Ministry of Micro, Small and Medium Enterprises (MSME). Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer: A. Statement 1 is correct: QCOs are issued under the BIS Act to mandate conformity to standards. Statement 2 is incorrect: The Transition Facilitation (Quality Control) Order, 2026 was notified by the Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, not the Ministry of MSME.

Q2. The eighth Trade Policy Review of India, where concerns regarding India's non-tariff barriers and QCOs were raised by trading partners, took place under the auspices of which of the following international organizations?

1. United Nations Conference on Trade and Development (UNCTAD)
2. World Trade Organization (WTO)
3. World Bank
4. Organisation for Economic Co-operation and Development (OECD)

Answer: B. Trade Policy Reviews are a core function of the World Trade Organization (WTO), through which member countries' trade policies and practices are periodically examined.

Q3. With reference to the Transition Facilitation (Quality Control) Order, 2026, consider the following statements: 1. It aims to ease regulatory bottlenecks by allowing eligible firms to temporarily source products from BIS Scheme-II-licensed suppliers. 2. It applies universally to all manufacturing sectors without any eligibility criteria or committee approval. Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer: A. Statement 1 is correct: The order allows eligible firms facing BIS Scheme-I certification difficulties to temporarily source from BIS Scheme-II-licensed suppliers in specified sectors. Statement 2 is incorrect: Access to this mechanism is subject to prescribed eligibility criteria and approval by a committee constituted by the DPIIT, not universally without conditions.

Revision flashcards

• What ministry/department notifies Quality Control Orders (QCOs) in India? The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry (often in conjunction with the Bureau of Indian Standards).
• What was the core objective behind the Transition Facilitation (Quality Control) Order, 2026? To ease regulatory bottlenecks by allowing eligible firms facing BIS Scheme-I certification issues to temporarily source from BIS Scheme-II-licensed suppliers in specified sectors.
• Under which WTO mechanism were concerns regarding India's QCOs and non-tariff barriers raised in July 2026? The eighth Trade Policy Review of India.
• How do input QCOs typically impact smaller downstream industrial firms according to recent studies? They result in a steep decline in profitability due to limited ability to absorb rising input costs and bear additional compliance burdens.
• What is the primary trade dilemma associated with the rapid expansion of QCOs on intermediate goods? While they ensure product quality and check substandard imports, they can disrupt supply chains, raise input costs, and hinder integration into Global Value Chains (GVCs).