 "Quality Control Orders")
India’s recent rollback of quality control orders (QCOs) has been greeted with relief and, in some quarters, applause. The government has begun dismantling a regulatory regime that disrupted supply chains, raised costs for exporters, and generated trade friction abroad. Inputs in textiles, steel and chemicals have been among the first to see reversals. In a difficult global environment, stepping back from policies that weaken competitiveness is simply sensible.
But to celebrate rollback as reform is to mistake damage control for progress. The QCO episode is best understood not as an isolated error but as a symptom of a deeper problem in India’s economic governance: Inward-looking interventions followed by belated recognition of their costs and eventual retreat — often presented as pragmatism. The same dynamic has played out across economic policymaking, from a needlessly convoluted goods and services tax (GST) structure that is only now being simplified to the effective soft-pegging of the rupee in 2022-23 and its subsequent quiet unwinding. This article focuses on trade, but QCOs belong to a wider and recurring policy syndrome.
QCOs provide a convenient case study because their rise and fall have been unusually swift and visible. Although they have existed for decades, they were used sparingly until after 2020. Their numbers then surged dramatically, effectively turning them into non-tariff trade barriers. By restricting access to imported intermediate inputs, they raised production costs and hit export-oriented sectors the hardest.
Take apparel, for instance. QCOs imposed on polyester and viscose triggered a sharp collapse in imports. Firms initially stockpiled inputs in anticipation. Once inventories ran down, many were forced to rely on costlier or insufficient domestic substitutes. Predictably, productivity fell and exports suffered. These outcomes were not surprising — they followed basic economic logic.
By mid-2025, concerns within the government about supply disruptions were becoming harder to dismiss. The return of Trump-era trade shocks played a catalytic role — doing what internal warnings had failed to do. An inter-ministerial review mechanism was subsequently set up, and no new QCOs were issued thereafter. Later, a NITI Aayog report recommended scrapping many of them, especially those covering intermediate goods. From mid-November, the rollback began.
The timing is telling. As late as early November, the government was still defending QCOs and signalling their expansion. By mid-November, the QCO regime began to be quietly dismantled. When a policy is extolled for massive expansion one day and quietly dismantled the next, the issue is not a tactical adjustment. It is policy incoherence laid bare.
That pattern predates QCOs. Around 2017-18, India decisively reversed its post-1991 trajectory of trade liberalisation. After nearly three decades of lowering tariffs and deeper integration, policy turned inwards. Tariffs were raised across thousands of product categories, with the largest increases in labour-intensive manufacturing — precisely the sectors most dependent on cheap imported inputs to compete globally.
The consequences were predictable. Higher tariffs raised prices for consumers and increased input costs for manufacturers. Countries such as Vietnam and Bangladesh, which kept input tariffs low, saw their apparel sectors flourish. India, by contrast, struggled to convert global demand into export growth.
By 2022, the limits of this inward turn were becoming apparent. Anti-dumping duties imposed on steel in 2018-19 were revoked to contain costs, and proposed duties on PVC imports were shelved before implementation. Import tariffs were quietly reduced across many sectors, culminating in significant across-the-board cuts in 2023.
Taken together, these episodes reveal a familiar pattern: Interventions justified as strategic, followed by retreat once the economic damage becomes undeniable. But that damage is not reversible. Firms do not pause and resume on cue. When access to inputs is disrupted, supply chains are rewired, buyers move on, and investments are abandoned. The most productive firms — often the most export-oriented —are hit first, and lost market share is rarely recovered.
This is why conflating reversals with reforms could be damaging. Treating the two as equivalent weakens accountability and increases the risk of repetition. The irony is that India has imposed this uncertainty on itself at a particularly difficult moment. Global trade is already under strain from geopolitical fragmentation, slowing demand, and rising protectionism elsewhere. In such an environment, predictability is an economic asset. Instead, domestic uncertainty has been layered on top of global uncertainty.
The QCO rollback should be welcomed. But it should also prompt harder questions: Why is policy so often designed in ways that require retreat? Is decision-making too unilateral, too insulated from criticism, too dismissive of consultation, or too detached from technical expertise? Until this governing reflex is addressed, policy uncertainty will remain self-inflicted — and costly.
The author is managing director, Insignia Policy Research, and Visiting Fellow, Madras Institute of Development Studies
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
