Mint Explainer | Why the government is slowing QCO expansion even as it pushes for quality manufacturing

The rollback has reduced the number of products under mandatory QCOs to 744, down from 761, when the Centre had earlier targeted bringing more than 700 additional products under compulsory standards in FY26.

The move stands out because it coincides with a renewed public push by the Centre for quality-driven manufacturing. At Udyog Samagam 2025, commerce and industry minister Piyush Goyal reiterated that QCOs remain central to India’s efforts to ensure that high-quality, globally competitive products reach consumers.

As India is on the verge of becoming a global manufacturing hub, meeting international quality standards and adapting to global norms will be essential. Industry executives say that more QCOs can certainly be introduced, but only after India strengthens its domestic manufacturing capacity for key raw materials. Otherwise, smaller firms will struggle, and large companies will gain outsized market power simply because others lack access to certified or compliant inputs.

Why were the QCOs pulled back now?

The latest rollbacks align with deliberations within the high-level committee on non-financial regulatory reforms chaired by former cabinet secretary Rajiv Gauba. The committee, in its second report, recommended rationalising or phasing the rollout of several QCOs, especially for raw materials used by micro, small and medium enterprises (MSMEs).

It flagged concerns around testing infrastructure, short implementation windows, and the risk of supply disruptions if large volumes of industrial intermediates were suddenly brought under strict compliance.

The panel argued that while quality regulation is essential, intermediate goods require a more calibrated approach than final consumer products. It suggested prioritising sectors where safety is directly affected and allowing industry a predictable transition path for other categories.

Trade economist Abhash Kumar said the withdrawal reflects this shift. He noted that the industry’s concerns were not about resisting standards but about the pace and practicality of implementing them. According to him, the decision gives the ecosystem time to build testing capacity and make adjustments without affecting production or export timelines.

What did Piyush Goyal signal at Udyog Samagam?

Even as QCOs are withdrawn in some sectors, the government’s broader message on quality remains unchanged. At Udyog Samagam 2025, Goyal said QCOs have helped remove substandard imports and strengthen domestic industry, citing successes in toys and plywood.

The minister pledged to bring 2,500 products under the QCO regime and urged states to adopt stronger implementation frameworks, establish third-party verification mechanisms and ensure timely disbursal of industrial incentives. The minister’s remarks made it clear that QCOs continue to be a priority for the Centre, even as timelines are adjusted for specific sectors.

What will be the impact on industries and imports?

India has a strong petrochemical manufacturing base—led by Reliance Industries, Indian Oil Corporation, the Aditya Birla Group, Indo Rama Synthetics, JBF Industries, Filatex India, Bombay Dyeing and GAIL—but still depends heavily on imports for several critical grades of PTA, MEG, polypropylene, polyethylene and ABS.

The withdrawal of QCOs on these intermediates is expected to ease import restrictions, lower compliance burdens and support smoother supply of raw materials. Rajeev Gupta, joint managing director of RSWM Ltd, said the removal will help downstream industries source inputs at more competitive prices. He said that since polyester and polymer yarns form the bulk of India’s man-made fibre value chain, the easing will support production and improve export competitiveness.

He noted that cheaper inputs will strengthen India’s position in the global textile markets, although synthetic and grey yarn spinners may face additional pressure as imported yarn could also enter the market.

Where do the QCOs stand today?

After the recent rollbacks, 744 products remain under the QCO regime. Of these, 353 fall under the Department for Promotion of Industry and Internal Trade, 151 under the steel ministry, 60 under the Department of Petrochemicals, 76 under the textiles ministry, 64 under the electronics and IT ministry, and 14 under the ministry of heavy industries, according to government data. Prior to the withdrawal of 14 products on Wednesday and three on 23 July, there were 77 products under the Department of Petrochemicals, which has now been reduced to 60.

The QCO framework, which began with 121 products in 2014, expanded steadily over the past decade as the government sought to curb low-quality imports and align manufacturing standards with global expectations. The withdrawals represent a pause rather than a reversal.

What does the recalibration mean?

The shift suggests that India is moving toward a two-track quality strategy: tougher norms for consumer-facing sectors, coupled with a more gradual rollout for industrial intermediates that are essential to maintaining supply-chain stability.

Future QCOs are likely to be introduced in phases, with longer transition periods and deeper consultation with stakeholders. Industry observers expect the Bureau of Indian Standards’ testing capacity, certification timelines and coordination with state governments to be strengthened before major expansions are revisited.

For now, the withdrawal of QCOs for select petrochemicals offers temporary relief to manufacturers dependent on imports, while the broader push for quality manufacturing remains firmly in place.

What is the global trend?

In major developed markets, regulators are tightening quality and safety rules that directly affect India’s export competitiveness. Policymakers in the European Union have expanded mandatory compliance requirements through regulations such as REACH and CLP for chemicals, Ecodesign rules for plastics and machinery, and upcoming sustainability standards for textiles. These frameworks require exporters to meet strict testing, traceability and labelling norms before their products can enter the EU market.

In the US, the Consumer Product Safety Commission and the Food and Drug Administration have strengthened safety and conformity norms for industrial chemicals, polymers, toys, electronics and food-contact materials, effectively creating higher entry barriers for foreign suppliers, including those from India.

Neighbouring markets—such as Bangladesh, Sri Lanka and Nepal—have begun adopting tighter conformity standards for plastics, chemicals and packaging materials as they integrate more closely with global value chains.

For Indian companies, particularly MSMEs involved in the production of polymers, textiles and intermediate chemicals, these global standards increase the cost and complexity of exporting.

Improving compliance will require expanding BIS-accredited testing infrastructure, providing graded transition timelines and offering targeted support to help MSMEs upgrade their processes. Wider use of digital traceability tools, stronger third-party assessments and more predictable compliance cycles would help companies follow Indian quality rules with due diligence while staying aligned with global standards.