Quality Control Orders 'Malign Intervention' to Restrict Imports, Raise Costs for MSMEs

Taking a dig at bureaucracy for coming up with Quality Control Orders (QCOs) for certain products, NITI Aayog Vice Chairman Suman Bery has said that the move is a 'malign intervention' to restrict imports, which leads to high costs for Micro, Small and Medium Enterprises (MSMEs).

Releasing the report titled 'Unlocking $25+ Billion Exports: India's Hand & Power Tools Sector', Bery said India's 14-17 per cent cost disadvantage is a significant barrier which is exacerbated by import restrictions like QCOs, increased production expenses.

"My understanding is that we are, unlike certain countries, so keen to be WTO (World Trade Organization) compliant that we are looking for other ways to keep certain inputs out, and these quality control orders are the mechanisms we have arrived at," Bery said at a media briefing.

Earlier this year, the government had expanded quality compliance requirements by mandating Quality Control Orders (QCOs) for over 150 products, ranging from household appliances to industrial materials, in a move aimed at ensuring stricter safety and performance standards.

"It takes a certain genius for the bureaucracy to come up with an intervention which is even more malign (than tariffs) because of arbitrariness. All these compliance costs are murder for MSMEs," Bery added.

The Bureau of Indian Standards (BIS) said it has listed out 150-odd products in advance for better awareness purpose. The scope of these mandatory standards is extended to various sectors with varied enforcement dates.

The Aayog in its report also pitched for rationalising QCO restrictions on essential raw materials like steel to lower production costs.

It also pointed out that high import duty levied on key raw materials such as 15 per cent on steel imports, 10-15 per cent on motors, along with 7.5-10 per cent import duty on PVC resins create inefficiencies in India's manufacturing ecosystem.

"QCO restrictions on these raw materials such as steel and PVC add to the adversities of Indian manufacturers by increasing their dependence on higher cost domestic industry," the report said.

Moreover, the report said India's PVC and Nylon-6 consumption heavily depends on imports, with over 50 per cent of demand for imported PVC resin and almost 100 per cent of the demand for Nylon-6 met through imports.