While QCOs in some sectors and products have been removed, steel remains one of the sectors still reeling under QCO pressure
Chennai: Quality control orders on import of products and raw materials, which were meant to improve quality, are affecting the manufacturing sector, threatening the existence of MSMEs and helping large companies consolidate the market. With long procedural delays and compliance costs for certification of each product running into ₹15 lakh to ₹20 lakh, QCOs are eating away the margins of MSMEs.
While QCOs in some sectors and products have been removed, steel remains one of the sectors still reeling under QCO pressure, according to Shaunak Rungta, Central Executive Committee member of the Federation of Indian MSMEs.
Instead of boosting manufacturing, the measures have strengthened the position of large domestic players while making it difficult for MSMEs to survive. According to him, large companies that dominate sectors such as viscose staple fibre and polyester staple fibre pushed for QCO implementation, forcing smaller manufacturers to procure raw materials domestically at significantly higher prices.
Citing industry reports, he said prices of fibres increased by around 20% after QCO implementation, while exports declined by nearly 15%, resulting in export opportunities shifting to countries like Vietnam and Bangladesh that continue to source cheaper raw materials from China.
While concerns over substandard imports do exist, the current approach imposes unnecessary burdens across sectors that are not directly linked to consumer safety. “Quality standards should depend on consumer requirements," he said.
MSMEs are disproportionately affected because they operate on low margins and limited working capital. The certification process for foreign manufacturers through the Bureau of Indian Standards can take six to eight months, creating severe disruptions in raw material availability. “Even one month of non-availability of raw material can wipe out an MSME,” he said.
The compliance burden itself has become a major concern. Rungta explained that importers have to pay performance bank guarantees, testing fees, licensing fees, annual renewal charges and even travel expenses for BIS officials inspecting overseas factories. According to him, certification costs for one product can range from ₹15 lakh to ₹20 lakh.
He cited an example of a Vietnamese fastener manufacturer that was allegedly quoted ₹16.5 lakh for testing 29 steel fastener samples, despite actual testing costs being much lower. “The entire system has become certification-driven rather than quality-driven,” he said.
Although the government has withdrawn QCOs in sectors such as plastics, chemicals and some textile inputs, the recommendations on removing QCOs in steel sector by a high-level committee under former Cabinet Secretary Rajiv Gauba and NITI Aayog has made little progress.
The issue of “dual certification,” where even suppliers of raw materials to BIS-certified foreign factories are now required to obtain BIS certification has made compliance nearly impossible for global suppliers with no direct connection to India.
Rungta warned that the measures are hurting India’s competitiveness and encouraging monopolistic practices. He claimed that while revenues in the steel sector may have risen marginally, profits of major companies have surged sharply after the imposition of restrictions.
Calling for a risk-based approach, he said QCOs should be limited to sectors involving critical safety concerns such as electrical and electronic products. Existing mechanisms like the Directorate General of Trade Remedies could address dumping issues where necessary.
According to him, many MSMEs in sectors such as steel and textiles have already shut operations. He said his own fastener business has seen turnover decline by more than 50% since QCOs were imposed.
