Quality Control Orders (QCOs) (2016): Assessing India’s Standards-Based Industrial Policy

Background

Quality Control Orders (QCOs) are mandatory technical regulations, issued by Central Government Line Ministries after consultation with the Bureau of Indian Standards (BIS), that require specified products to comply with designated Indian Standards before they can be manufactured, imported, sold, or stored in India. The power to issue a QCO derives from Section 16 of the Bureau of Indian Standards Act, 2016, which replaced the earlier BIS Act of 1986 and gave the current QCO regime its legal foundation. Products covered under a QCO must carry a Standard Mark (the ISI mark) issued under a licence or Certificate of Conformity from BIS, as governed by the BIS (Conformity Assessment) Regulations, 2018, and violation of a QCO is a punishable offence under Sections 29 to 33 of the BIS Act, 2016, carrying monetary penalties, prohibition on sale, and potential imprisonment for responsible company officers.

The number of QCOs in force grew from just 14 in 2014 to roughly 70 by 2016, then expanded sharply, reaching 88 by 2019, 765 by December 2024, and 790 by October 2025, with a further 79 reportedly in the pipeline (CSEP, 2025; ThePrint, 2025). An internal NITI Aayog report cited by ThePrint found that nearly 70 percent of QCOs issued in the past five years cover raw materials, intermediates, or capital goods rather than finished consumer products, a composition shift from the policy’s original consumer-safety framing toward a broader industrial and trade-protection tool (ThePrint, 2025).

This expansion did not happen in isolation. It has unfolded alongside a broader shift in India’s trade policy since 2017, including rising tariffs on non-agricultural goods (from 13.5 percent in 2017 to 17.1 percent in 2018, and averaging 13 percent by 2024, compared with 6.5 percent in China and 5.3 percent in Malaysia), restrictions on Chinese FDI introduced in 2020, and the rollout of Production Linked Incentive (PLI) schemes (CSEP, 2025). Taken together, these measures reflect a deliberate policy shift toward reducing import dependence and building domestic manufacturing self-reliance, of which QCOs have become one of the principal instruments.

Functioning

A QCO becomes operative from a commencement date specified in the order itself, and from that date, no person may manufacture, import, distribute, sell, hire, lease, store, or exhibit for sale any covered product without a valid BIS Standard Mark, except where the order provides specific exemptions. Two categories of exemption recur across most QCOs: goods manufactured in India purely for export are generally not required to comply (though this exemption is not automatically extended to EOUs, SEZs, or FTWZ units), and Micro, Small and Medium Enterprises are typically granted an extended compliance timeline relative to larger enterprises, recognising that smaller units often lack the capacity to meet certification requirements immediately (SJ Exim, 2024).

For a foreign manufacturer, compliance runs through the Foreign Manufacturers Certification Scheme (FMCS), under which BIS certification becomes the entry credential for the Indian market; goods arriving without the requisite certification are detained by Customs at the port of entry. For a domestic manufacturer, a QCO functions as both a compliance obligation and a competitive floor: since uncertified products cannot legally enter the market, manufacturers who invest in certification are, in principle, protected from being undercut by cheaper, non-compliant alternatives.

Most recently, the Department for Promotion of Industry and Internal Trade (DPIIT) notified the Transition Facilitation (Quality Control) Order, 2026 on June 25, 2026, introducing a risk-based compliance mechanism that offers greater sourcing flexibility to manufacturers with a proven three-year uninterrupted compliance record under existing QCOs (Sarkaritel, 2026). This represents a shift from a uniform compliance standard toward a differentiated one that rewards demonstrated track record, and follows closely on the heels of a separate rollback of 69 QCOs in late 2025, discussed further below.

Performance

Assessing QCO performance requires distinguishing between product-specific case studies, where the evidence is relatively strong, and system-wide claims about manufacturing competitiveness, where it is considerably weaker.

Table 1: Growth in QCOs Issued, 2014–2025

Source: CSEP (2025); ThePrint (2025), citing an internal NITI Aayog report.

The most frequently cited case study is toys. Following the toy QCO’s effective date of January 1, 2021, combined with a basic customs duty increase from 20 percent to 60 percent in February 2020 (later raised to 70 percent in March 2023), India’s toy imports fell sharply, while the export picture is genuinely contested depending on which source and time window is used.

Table 2: India’s Toy Trade Before and After the QCO, Official vs. Independent Figures

Source: Compiled by author from Business Standard (2024a, 2024b), Deccan Chronicle (2024), and Tribune India (2025).

Note: The export figures span different, overlapping time windows from different sources, read together, they show growth through FY2022 followed by decline through FY2024. The official Commerce Ministry figure (+239%, FY2015–2023) predates this later decline, which is why GTRI’s narrower analysis looks less optimistic despite using the same underlying trade data. Some cells also lack an “official” counterpart, since export-stagnation and input-dependence findings come only from GTRI, not government releases, an asymmetry that is itself part of the point made in the surrounding text.

At the system level, the evidence is more cautionary still. A September 2025 CSEP study, examining QCOs as part of a broader assessment of India’s manufacturing competitiveness, found that despite the sharp rise in QCOs since 2020, India continues to lag behind Asian peers on manufacturing competitiveness, a gap the study attributes partly to elevated tariff levels and structural constraints rather than to QCOs delivering their intended competitiveness gains (CSEP, 2025). Separately, CSEP fellow Prerna Prabhakar, author of the September 2025 report “Decoding India’s Quality Control Orders,” told ThePrint that QCOs have suppressed imports of intermediate goods critical for domestic production without producing any significant improvement in exports, a finding that lines up with the NITI Aayog observation that 70 percent of recent QCOs target raw materials and intermediates rather than the finished consumer goods the policy was originally framed around (ThePrint, 2025).

This tension came to a head in late 2025, when the government rolled back 69 QCOs, 14 covering chemicals, polymers, and fibre intermediaries used in textiles, and 55 covering steel-related intermediaries used across industries including automobiles, explicitly citing the need to bolster exports and improve ease of doing business (ThePrint, 2025). A policy rollback of this scale, occurring within a decade of the QCO regime’s rapid expansion, is itself a significant data point: it suggests the government’s own internal assessment, via NITI Aayog, found that a meaningful subset of QCOs were functioning as supply-chain and cost burdens rather than delivering their intended quality or competitiveness objectives.

Impact

For the sectors where QCOs have been paired with complementary measures, tariff protection, cluster-development funding, and sustained enforcement, the impact on import substitution is real and well documented, even if the export-growth half of the intended outcome has proven harder to sustain, as the toy sector illustrates. Enforcement itself has been active rather than nominal: BIS reported seizing 41,106 uncertified toys across airports, ports, and shopping malls up to March 2023, and had granted more than 1,200 licences to domestic toy manufacturers and over 30 to foreign manufacturers by early 2024 (Business Standard, 2024a; Finifi, 2026).

The impact on MSMEs, however, has been considerably more contested, and this is where the policy’s stated consumer-safety rationale and its practical effect on smaller manufacturers diverge most sharply. Because a majority of QCOs issued in the past five years cover raw materials and intermediate inputs rather than finished goods, MSMEs that rely on imported intermediates for their own production have faced restricted supply chains and higher input costs, even when the MSMEs themselves are not the direct target of the QCO in question (ThePrint, 2025). This has fed a narrative among MSME representatives that QCOs function less as a quality-control tool and more as a protectionist mechanism that primarily benefits larger, more capitalised domestic producers able to absorb compliance costs, a framing directly at odds with the exemptions the government has built into individual QCOs specifically to ease the burden on smaller units (ThePrint, 2025).

The 2026 Transition Facilitation Order can be read as an implicit acknowledgment of this tension: by rewarding manufacturers with a three-year uninterrupted compliance record with greater sourcing flexibility, the government has effectively created a two-tier compliance environment, favourable for established, compliant manufacturers, and comparatively more demanding for newer or smaller entrants still building that track record (Sarkaritel, 2026). Whether this design meaningfully eases the MSME burden identified in the NITI Aayog report, or simply formalises the advantage that larger, already-compliant firms held, is not yet resolved in available data.

Emerging Issues

First, the composition of QCOs has drifted from consumer safety toward industrial protection, without a corresponding change in how the policy is publicly framed. QCOs are still commonly presented, including in BIS’s own communications, as instruments for consumer safety and product quality (PIB, n.d.). But with roughly 70 percent of QCOs issued over the past five years targeting raw materials, intermediates, and capital goods rather than finished consumer products, the policy’s actual centre of gravity has shifted toward managing industrial input supply chains, a materially different objective that arguably warrants a different, more trade-policy-specific justification and evaluation framework than the consumer-protection rationale under which QCOs are formally issued.

Second, the MSME compliance burden appears to be a genuine, government-acknowledged design gap rather than a one-off complaint. The late-2025 rollback of 69 QCOs on chemical, polymer, textile, and steel intermediaries, following directly from an internal NITI Aayog assessment of adverse manufacturing-competitiveness impacts, indicates that the government’s own analysis found a meaningful subset of QCOs to be net-negative for the manufacturing base they were meant to strengthen (ThePrint, 2025). This is a stronger form of evidence than industry lobbying alone would provide, since it reflects the state’s internal evaluation of its own policy instrument.

Third, the gap between import substitution and export growth remains unresolved even in the policy’s strongest showcase sector. Toys illustrate this precisely: QCOs and tariffs together achieved a large, durable reduction in low-quality imports, but independent analysis shows export growth stalling and reversing after FY2022, and continued heavy reliance on imported manufacturing inputs even as finished-product imports fell (Business Standard, 2024b). If QCOs are justified partly on the grounds of building export-competitive domestic manufacturing, the toy sector’s trajectory suggests that import substitution alone, without deeper investment in domestic input supply chains, does not reliably translate into sustained export growth.

Fourth, QCOs have become a recurring point of friction in India’s trade relationships, even where they have not escalated into formal WTO panel disputes. Multiple QCOs, including those on furniture (2023) and cookware and utensils (2023), have been raised as Specific Trade Concerns at the WTO’s Technical Barriers to Trade Committee by trading partners (WTO Trade Concerns Database). This is a lower-intensity form of international friction than a formal dispute panel, but its recurrence across multiple, unrelated product categories suggests trading partners view India’s QCO regime as a systemic rather than isolated concern, one that could eventually accumulate into more formal disputes if left unaddressed.

Finally, frequent and significant policy revision suggests the QCO regime, like other rapidly scaled Indian regulatory frameworks, is still being actively corrected rather than settled. In the space of roughly eighteen months, the government both expanded QCO coverage toward 790 products, rolled back 69 of them, and introduced an entirely new risk-based compliance mechanism through the 2026 Transition Facilitation Order. This pace of change indicates the current QCO architecture, much like TReDS or PFMS’s SNA framework discussed elsewhere in this series, should be treated as a work in progress rather than a finished policy design.

Way Forward

First, the government should formally recognise and separately evaluate the two distinct functions QCOs now serve, consumer safety on finished goods and industrial input management on raw materials and intermediates, since conflating them under a single consumer-protection justification obscures the actual trade-off being made when a QCO is issued on an intermediate good used by downstream MSMEs.

Second, the NITI Aayog assessment that informed the late-2025 rollback should be made public in full, rather than remaining an internally circulated report accessed only through investigative reporting. A published, methodologically transparent review of which QCOs delivered measurable quality or competitiveness gains, and which imposed disproportionate MSME costs, would allow future QCO decisions to be evaluated against demonstrated evidence rather than sector-by-sector lobbying.

Third, future QCOs on intermediate and raw material inputs should be paired more deliberately with domestic supply-chain investment, not just import restriction, drawing on the toy sector’s lesson that curbing finished-product imports without building domestic input capacity limits the durability of any resulting export gains.

Fourth, the compliance-tier structure introduced by the 2026 Transition Facilitation Order should be extended with a clear, published pathway for smaller and newer manufacturers to build the three-year compliance track record it rewards, potentially through phased certification support or shared testing infrastructure for MSME clusters, so the new framework closes the MSME gap identified by NITI Aayog rather than simply formalising the advantage already held by larger, established compliant firms.

Finally, given the recurrence of QCOs as WTO Specific Trade Concerns across unrelated product categories, DPIIT and the Ministry of Commerce should proactively engage with the WTO TBT Committee on India’s QCO methodology before individual concerns accumulate into formal disputes, using the engagement process to strengthen, rather than dilute, the scientific and safety justification underpinning future QCOs.

References

Bureau of Indian Standards. (2016). Foreign Manufacturers Certification Scheme (FMCS). https://www.bis.gov.in/product-certification/foreign-manufacturers-certification-scheme-fmcs/

Business Standard. (2024a, January 4). 52% drop in toy imports in 8 years, 239% jump in exports: Commerce Ministry. https://www.business-standard.com/industry/news/52-drop-in-toy-imports-in-8-years-239-jump-in-exports-commerce-ministry-124010400932_1.html

Business Standard. (2024b, May 7). Toy exports down at $152 mn in 2023-24, need strategy to push it: GTRI. https://www.business-standard.com/industry/news/toy-exports-down-at-152-mn-in-2023-24-need-strategy-to-push-it-gtri-124050700889_1.html

CSEP (Centre for Social and Economic Progress). (2025, September). India’s Quality Control Orders: Understanding Key Trends. https://csep.org/blog/indias-quality-control-orders-understanding-key-trends/

Deccan Chronicle. (2024, May 12). India’s Toy Import Curbs Yield Success, Exports Stagnate. https://www.deccanchronicle.com/business/economics/indias-toy-import-curbs-yield-success-exports-stagnate-893653

Finifi. (2026, June 15). India’s Toy Industry: Detailed Trend Analysis (2026). https://finifi.io/market-pulse/indias-toy-industry-detailed-trend-analysis/

Press Information Bureau (PIB), Ministry of Commerce and Industry, Government of India. (n.d.). BIS implements Quality Control Orders (QCOs) to ensure quality products. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1848218&reg=48&lang=2

Sarkaritel. (2026, June 26). DPIIT Launches New Quality Control Order For Industry Ease. https://www.sarkaritel.com/dpiit-quality-control-order-2026/

SJ Exim Services. (2024, August 12). Quality Control Orders (QCO) and Mandatory BIS standards enforcement in India. https://sjexim.services/2024/08/12/quality-control-orders-qco-and-mandatory-bis-standards-enforcement-in-india/

ThePrint. (2025, November 15). As govt starts rolling back Quality Control Orders, a look at adverse impact they had, mainly on MSMEs. https://theprint.in/economy/as-govt-starts-rolling-back-quality-control-orders-a-look-at-adverse-impact-they-had-mainly-on-msmes/2785033/

Tribune India. (2025). Indian toy industry on a strong growth trajectory: exports up 40pc, imports down 79pc over 5 years. https://www.tribuneindia.com/news/business/indian-toy-industry-on-a-strong-growth-trajectory-exports-up-40pc-imports-down-79pc-over-5-years-report

WTO Trade Concerns Database. India – Furniture (Quality Control Order), 2023 (ID 828); Cookware and Utensils (Quality Control) Order, 2023 (ID 830). https://tradeconcerns.wto.org/en/stcs

About the Contributor :

Divya Natarajan is a Research and Editorial Intern at IMPRI and a recent Economics graduate from Stella Maris College, Chennai. She has experience in public policy research, editorial writing, and policy analysis through internships with think tanks and research organisations. Her interests include public policy, governance and development economics.

Acknowledgements :

I would like to extend my gratitude to IMPRI for this opportunity, constructive reviews and editorial support.

Reviewers:

Tanisha and Gayathry Sanjay

Disclaimer:

All views expressed in the article belong solely to the author and not necessarily to the organisation.

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