Rethinking quality control: The new order will not solve the problem

The Union government’s decision to introduce the Transition Facilitation (Quality Control) Order, 2026, implicitly shows that India’s “quality control order” (QCO) regime is affecting business and supply chains, particularly in the manufacturing sector. The new framework allows manufacturers in sectors such as toys, footwear, air-conditioners, furniture, and washing machines, to source products through a risk-based compliance mechanism rather than the conventional route of certification by the Bureau of Indian Standards (BIS). Companies with a proven compliance record, sound quality systems, and strong technical capabilities can obtain permission through a government committee while continuing to meet Indian standards. The objective is to ease supply bottlenecks without compromising quality. The immediate relief is welcome, but it will not solve the actual problem. 

The original purpose of QCOs was to ensure quality standards to protect consumers, improve product quality, and keep substandard imports out of the Indian market. Over time, however, the policy expanded far beyond these objectives. From covering around 100 products in 2014, QCOs now extend to well over 650 product categories. Besides, they no longer apply only to finished consumer goods. Raw materials, industrial components, intermediates, and machinery have increasingly come within their ambit, affecting manufacturing supply chains. The economic costs of the regime are mounting. Manufacturers dependent on imported inputs have found themselves unable to source components because overseas suppliers first need certification from the BIS. The approval process is often slow, expensive and uncertain. The burden falls disproportionately on micro, small and medium enterprises, which lack the leverage to persuade foreign suppliers to obtain Indian certification or the resources to withstand prolonged delays. Far from making Indian manufacturing more competitive, the regime has made it harder for domestic firms to integrate with global value chains. QCOs are often seen as a non-tariff barrier on imports. 

A study by the Centre for Social and Economic Progress found that over time, imports of QCO-covered products declined by about 24 per cent after the orders were introduced, but exports showed no corresponding improvement. Restricting access to quality inputs without strengthening export competitiveness merely raises production costs while leaving manufacturers less competitive in international markets. The government’s review appears to have reached similar conclusions. A high-level committee led by NITI Aayog member Rajiv Gauba had recommended the cancellation, suspension or deferment of more than 200 QCOs after finding that they increased compliance costs and disrupted supply chains. Based on the panel’s advice, about 76 of these orders had been kept in abeyance as of November 2025, but little movement has been reported since then. 

The latest notification stops well short of the warranted reform. Rather than rationalising the QCO regime itself, the government has opted for a selective exemption mechanism. The committee-led bureaucratic approach will only increase uncertainty and friction for Indian importers. The system is akin to the “licence raj”, where permissions are issued selectively, with considerable bureaucratic discretion and little accountability. Notably, licences under the new system will initially be valid for two years and could be renewed. This would obviously increase uncertainty. Instead, what is actually needed is a comprehensive review of the QCO regime. The government must objectively look at the costs and benefits of the regime. Mandatory QCOs should be limited to products with direct implications for consumer health and safety. Industrial inputs should instead be governed through transparent, risk-based standards backed by market surveillance and strict penalties for violations.