Commerce and Industry Minister Piyush Goyal said in Tokyo on August 25 that India would develop a framework to ease or waive mandatory quality certification for high-technology industries. The announcement followed concerns raised by Japanese companies about India’s Quality Control Order system. The proposed relief for high-technology industries is welcome. But India needs a broader review of its QCO regime, which is raising costs for manufacturers, disrupting supply chains and discouraging investment.
A JETRO survey for fiscal 2025 found that 71.9% of Japanese manufacturers in India said BIS certification had affected, or was expected to affect, their operations. The share reached 92.3% among general-machinery companies and 76.8% among transportation-equipment manufacturers. Most affected companies described the impact as serious or very serious.
Procedural Delays
Approval delays and complex procedures were the biggest problems. Nearly three-quarters of respondents cited lengthy approvals or cumbersome requirements. Others struggled to determine whether their products required certification or complained about high costs. The Japanese firms reported that certification can require product testing, extensive documentation and inspections of foreign factories by BIS officials. The overseas manufacturer must bear the cost, even when its products already meet Japanese or international standards.
The rules have also disrupted supply chains. Some Japanese companies changed suppliers because overseas manufacturers were unwilling to obtain India-specific certification for small orders. Others could not find Indian substitutes that met their technical requirements.
JETRO survey said 42.7% of affected businesses faced suspended sales or delayed deliveries. Companies also reported difficulty obtaining No Objection Certificates for imports that had previously been cleared without full certification.
Indian small businesses may bear an even greater burden. Announcing relief for hi-tech sector cannot substitute for wider reform of an unsuitable certification model. India cannot exempt hi-tech machinery while extending QCOs to products such as footwear and furniture, where the safety justification is weak and compliance costs fall heavily on MSMEs.
The case of a Vietnamese screw manufacturer illustrates the problem. The company reportedly paid about ₹2 million for testing at a BIS-nominated laboratory and another ₹4 million for consultancy, inspection and related expenses. Despite completing the process, it has received no final BIS decision. Open-ended procedures can turn a quality-assurance system into a costly licensing regime.
India should consider adopting a risk-based system closer to the European model. For many products, the European Union publishes standards and allows manufacturers to declare conformity and use the CE mark without prior government registration. Regulators rely on market surveillance and impose strict penalties for violations.
India could similarly reserve mandatory prior testing, registration and factory inspections for products that present genuine risks to health, safety, national security or the environment. Lower-risk products could be covered by manufacturer declarations, market checks and penalties for noncompliance.
End Double Certification
The government should also end double certification. In many cases, say for steel, QCOs apply separately to both the inputs and the finished product. After multiple media highlights and pressure from various downstream associations, this requirement had been suspended until September 2026, but the relaxation should be made permanent. Exemptions for machinery and specialised industrial inputs should also be permanent.
The Steel Ministry’s approach highlights another problem. Following the Gauba Committee’s recommendations, the ministry ended the requirement for No Objection Certificates for products not covered by QCOs. But it replaced that system with a list of products treated as exempt. Many products that are not subject to QCOs are missing from the list. Importers must therefore seek additional clearances, leading to delays and higher costs. Any product outside the scope of a QCO should be cleared automatically rather than requiring its inclusion on a separate exemption list.
QCOs are also difficult to justify for many everyday products, including footwear and furniture, that present no safety risk. Mandatory certification raises costs, hurts MSMEs and makes goods more expensive. For such products, quality, design and comfort are better determined by consumer choice and competition.
Should India exempt high tech industry while keeping shoes and furniture under QCOs requirement?
India should also consider what would happen if other countries adopted the same approach. Indian exporters could be forced to obtain separate country-specific certifications even when their products already meet recognised international standards, and bear huge travelling and per-diem costs for visiting officers, licensing, renewal and testing fees. This would raise export costs, delay shipments and create new barriers to trade.
A top-level review is needed to ensure that QCOs protect consumers without becoming import restrictions or licensing barriers. Without wider reform, the system risks weakening MSMEs, raising prices and discouraging the manufacturing investment that Make in India seeks to attract.
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