India wants global factories, but its own quality checks may be putting investors off: GTRI
A trade policy think tank released a study flagging that India's Quality Control Order (QCO) regime under the Bureau of Indian Standards (BIS) is raising compliance costs, causing delays, and disrupting supply chains for manufacturers, with a disproportionate burden on small and medium enterprises.
A separate industry survey found that a large majority of foreign manufacturing operations in India, including from Japan, reported being affected or expecting to be affected by mandatory BIS certification requirements, particularly in machinery and transport-equipment sectors.
The study recommended a shift toward a risk-based regulatory model, drawing on approaches such as the European Union's conformity-declaration system, along with capping testing charges, recognising accredited foreign laboratory reports, and conducting regulatory impact assessments before new orders are issued.
The findings feed into an ongoing government review of the QCO framework aimed at easing the compliance burden on manufacturers while retaining consumer-safety and quality objectives.
Bureau of Indian Standards (BIS) and Quality Control Orders
The Bureau of Indian Standards is India's National Standards Body, established under the BIS Act, 2016 (notified 22 March 2016, in force from 12 October 2017), replacing the earlier BIS Act of 1986. It formulates Indian Standards and administers certification schemes, including the compulsory registration scheme (CRS) and product certification marks. A Quality Control Order (QCO) is a legal instrument issued by a central ministry or regulator under the BIS Act that makes conformity to a specified Indian Standard mandatory for a product; once notified, that product cannot be manufactured, imported, sold, or distributed in India without valid BIS certification.
Key Details
- The BIS Act, 2016 permits mandatory certification of goods, processes, or services considered necessary for public interest, health and safety, environmental protection, prevention of unfair trade practices, or national security.
- As of recent government data, 187 Quality Control Orders have been notified, covering 769 products under compulsory BIS certification, spanning categories such as cement, electrical appliances, toys, LPG cylinders, and automotive components.
- The Act also enables simplified conformity assessment routes, including self-declaration of conformity, and mandatory hallmarking of precious metal articles.
The study's call for a "risk-based" framework directly targets how QCOs are implemented, proposing lighter-touch conformity options (such as EU-style self-declaration) for low-risk products instead of blanket mandatory third-party certification, which is the core friction point raised by both domestic MSMEs and foreign investors.
Trade Policy and Non-Tariff Barriers (Technical Barriers to Trade)
Quality control and standards requirements, while legitimate under the WTO's Technical Barriers to Trade (TBT) Agreement, can function as non-tariff barriers when compliance costs, testing delays, or documentation burdens exceed what is proportionate to the underlying risk. This is a recurring theme in India's trade and ease-of-doing-business policy discourse, alongside tariff structure, FDI norms, and logistics costs, as part of the broader push to position India as a manufacturing and export hub under initiatives such as Make in India.
Key Details
- The WTO TBT Agreement requires that technical regulations not be more trade-restrictive than necessary to fulfil a legitimate objective (health, safety, environmental protection).
- India has faced scrutiny at the WTO from trading partners over the pace of QCO notifications across sectors like steel, chemicals, and electronics.
- Regulatory impact assessment (RIA) before issuing new technical regulations is a globally recommended practice to balance quality objectives against compliance costs.
The study's recommendations, capping testing charges, recognising foreign accredited labs, and conducting prior impact assessments, are aimed at aligning India's QCO practice more closely with TBT-consistent, proportionate regulation, addressing investor concerns that current rules function as an unintended barrier to trade and investment.
- 187 Quality Control Orders currently cover 769 products under BIS compulsory certification in India.
- The BIS Act, 2016 came into force on 12 October 2017, replacing the 1986 Act.
- A JETRO survey for fiscal year 2025 found that operations of roughly 72% of Japanese manufacturers in India were affected, or expected to be affected, by BIS certification requirements; the share was around 92% among general-machinery firms and about 77% among transportation-equipment manufacturers.
- Key reform proposals include a European Union-style risk-based, self-declaration conformity model, capped testing fees, and recognition of accredited foreign laboratory test reports.