QCOs Leading To Rising Costs, Supply Chain Disruptions: MSMEs

New Delhi, Sept 16 (KNN) According to government figures, the Bureau of Indian Standards (BIS) has published 84 Quality Control Orders (QCOs) for 343 products over the past three years. 

This represents nearly 45 per cent of the QCOs issued under the BIS Act that has now been expressed to cover 187 products. The BIS Act stipulates that no products, indigenous or imported, may be sold unless the products meet prescribed standards. 

QCOs are legal tools generated by ministries or departments to institute the enforcement of quality control standards. 

Although direct in intent for protection of the public interest in regards to health, safety and fair trade, the rise in QCOs issued has garnered opposition from micro, small and medium enterprises (MSMEs). Trade bodies responsible for MSMEs take the position that mandatory certification is causing input costs to increase, and it is tantamount to a non-tariff barrier. 

At a recent presentation, the Federation of Indian Micro and Small & Medium Enterprises (FISME) cited examples of how QCOs are constricting supply and causing costs to rise. 

“India is a layered society and affordability is an important aspect. Uplifting quality standards on such products as shoes and utensils is shutting off small producers from being able to participate in the supply chain and is depriving significant portions of people living impoverished lives, who cannot afford to buy expensive products. There are no places around the world where a quality standard is in use,” FISME said.

Since 2019, QCOs have grown over 8 times and disrupted supply chains because 70% of QCOs are for raw material or intermediate goods. There is a QCO on steel, which covers almost all steel, and therefore choked-off the supplies of specialised steel which is not manufactured in India. 

Of the total QCOs issued to date, 86 (362 products) came on the recommendation of the Department for Promotion of Industry and Internal Trade, 69 (74 products) via the Department of Chemicals and Petrochemicals, and 10 (76 products) from the Ministry of Textiles. 

The orders issued since 2022 covered a range of categories including jute bags, helmets, medical textiles, agro textiles, gas stoves, ceiling fans, stainless steel tube, solar thermal systems and water bottles. 

According to officials, ministries begin the process of establishing a QCO for a product by identifying the product(s) subject to mandatory compliance and convening stakeholders for discussions to agree on a draft QCO in collaboration with the Bureau of Indian Standards. 

The draft QCOs are also notified on WTO Technical Barriers to Trade portal for international comments before approval is sought.