How Quality Testing Norms Are Squeezing Indian MSMEs

A foreign manufacturer, trying to export ordinary industrial screws to India, recently received a testing bill of $17,545, or roughly ₹16.5 lakh, to certify 29 samples across three product categories: drilling screws, drywall screws, and chipboard screws. The invoice was brought to light by New Delhi-based policy think tank Global Trade Research Initiative.

Standard fasteners. The kind found in nearly every factory, construction site, and hardware shop across the country. The tests themselves were entirely routine: tensile strength, hardness, torque, dimensional tolerance, surface coating.

What made the bill remarkable was a single comparison that the GTRI, which reviewed the case, placed alongside it: industry estimates suggest that establishing a laboratory capable of running these tests precisely costs somewhere between ₹25 and ₹30 lakh. Basically, one certification exercise for 29 screws had cost nearly as much as building the testing infrastructure itself.

This is not a story about one unusual invoice. It is a story about how a system built to protect consumers quietly became a system that punishes smaller businesses — and such high testing costs for Quality Control Orders or QCOs products hurt Make in India and put MSME importers at risk, GTRI highlighted.

How QCOs Work

The QCOs are government notifications that make it mandatory for manufacturers — whether domestic or foreign — to obtain certification from the Bureau of Indian Standards (BIS) before selling specified products in the Indian market. The purpose is to keep substandard goods out, protect consumers, and create conditions in which domestic industry can compete on fair terms rather than being undercut by cheap, inferior imports.

In sectors like toys and white goods, the positive results were visible, especially with the introduction of the Production-Linked Incentive (PLI) scheme.

Then the expansion began. India had just 88 QCOs in 2019. Now it has surpassed 150.

For foreign manufacturers whose products fall under a QCO, entering India requires certification through the BIS’ Foreign Manufacturers Certification Scheme (FMCS). While intended as a quality check, the process is cumbersome and often acts as a barrier. Firms must appoint an Authorised Indian Representative who bears legal responsibility, submit detailed technical and compliance documents, and undergo an on-site inspection by BIS officials, with product samples tested in India.

This process typically takes six to nine months, and each product and factory requires a separate licence. “Large firms may survive such compliance costs. MSME importers will simply shut shop,” GTRI noted.

Shaunak Rungta, Central Executive Committee Member at FISME India — one of the country's principal MSME industry bodies — did not soften his assessment. The foreign certification mechanism, he said, had become "a newly brought out licence raj, wherein rent-seeking has seeped into every level of the system. Any product under QCO should be brought only after proper due diligence of the domestic production vs demand vs idle capacity."

The Unintended Consequence: Fewer Choices

The deeper problem with the QCO regime, as it has expanded, is not just cost — it is the concentration of market power it produces almost as a side effect.

GTRI said when a foreign manufacturer decides that BIS certification is too expensive and too time-consuming for the volumes they supply to India, the MSME importer in India loses a supplier. They must turn to a domestic producer, who may have fewer competitors and less incentive to keep prices honest. The QCO, nominally a quality mechanism, has functioned as a market concentration mechanism.

A recent RIS Discussion Paper published in April 2026 by former Commerce Secretary Rajeev Kher and accreditation expert Anil Jauhri identified the structural root of this problem. The BIS Act was not designed to be the principal instrument for all of India's technical regulations across hundreds of product categories. It was built for a different era.

The paper argued that running both conformity assessment and market surveillance through the same institution — BIS — creates a conflict of interest that internationally accepted regulatory practice specifically warns against. It noted that there is no mutual recognition arrangement involving BIS certification with any major trading partner, meaning Indian exporters in certified sectors still face full re-testing in destination markets regardless.

Course Correction

The government has begun to respond.

The Gauba Committee, constituted in August 2025 to review the QCO framework, proposed the cancellation, suspension, or deferment of QCOs for more than 200 products, citing compliance burdens and supply chain disruptions as having damaged India's manufacturing competitiveness.

In November, the government withdrew QCOs on 14 items, including plastics, polymers, synthetic fibres, and yarns. Further rollbacks on metals followed.

But fasteners — the category that produced the ₹16.5 lakh invoice — remain under QCO. Steel, where distortions continue to accumulate, has only seen partial relief. And the institutional architecture that allowed the overreach in the first place remains largely intact.

What Experts Suggest

The GTRI report on the screw invoice urged the government to cap testing charges for routine industrial products, recognise test reports from internationally accredited foreign laboratories, and adopt risk-based testing norms rather than blanket sample requirements.

Rungta, speaking for FISME, made a complementary argument that self-certification norms on the model of Europe's CE mark or America's FCC process, where the manufacturer bears legal responsibility for compliance rather than requiring pre-market regulatory approval, would dramatically reduce the bottleneck without sacrificing accountability.

The RIS paper argued for a more fundamental restructuring: a dedicated National Authority on Quality to provide whole-of-government oversight; legislative reform to move technical regulation away from sole dependence on the BIS Act; and recognition of accredited foreign laboratory reports, so that a manufacturer who has already been tested to a credible international standard does not face the same process from scratch at the Indian border.

None of these fixes are without risk. The government’s own experience with recent rollbacks has shown how quickly concerns about cheap imports — particularly from China — can resurface.