Good riddance: India is axing quality control orders on manufacturing inputs—let’s push ahead and remove the rest

On 12 November 2025, the ministry of chemicals and fertilisers abolished QCOs for several input materials, including terephthalic acid, ethylene glycol, polyester spun yarn, polyester yarn, EVA copolymers, polycarbonates and others. This step eases compliance pressures across textiles, chemicals, plastics and downstream manufacturing.

On 13 November, the ministry of mines issued a notification withdrawing QCOs on base metals and alloys such as aluminum and aluminum alloys, nickel, refined nickel, tin ingots, refined zinc, copper and primary lead.

The ministry of heavy industries has notified its Machinery and Electrical Equipment Safety (Omnibus Technical Regulation) Second Amendment Order, 2025, effectively pushing QCO implementation forth.

Additionally, the ministry of steel has decided to suspend QCOs on 55 steel products, most of which are inputs.

The government’s move to strike down QCOs dating back to September 2021 marks India’s willingness to support businesses and strengthen our competitiveness by embracing a more open, rules-based economic order. For industries long weighed down by the friction of compliance, this is like the first gust of wind before a much-needed monsoon. It is more than administrative housekeeping; it is a signal that India is continuously recalibrating regulations to promote economic vitality, rather than stifle it.

Recently, a high-level Niti Aayog committee recommended a decisive push to abolish QCOs for specific input materials. Abolishing QCOs on these will deliver broad benefits to our manufacturing sector, especially micro, small and medium enterprises (MSMEs).

Nearly half of all QCOs introduced over the past eight years target intermediate goods, the very backbone of production. Mandatory certifications for such inputs raise landed costs, create testing delays of 4 to 12 weeks and force MSMEs to rely on a narrow set of certified foreign suppliers. Dropping these QCOs can cut input costs by 8-12%, freeing capital, easing operational pressures and boosting competitiveness.

A telling example of how QCOs can inadvertently raise input costs is the Copper Products (Quality Control) Order, 2023, which was withdrawn this week. After it went into force, it immediately disrupted supply, particularly from Japan, from where we sourced 80% of our refined copper.

Japanese smelters had to apply for fresh licences, which took time. The impact was visible. Copper imports dropped. However, manufacturers substituted copper imports with imports of downstream products such as wires, tubes, pipes and sheets.

These were goods already being made in India. Still, their imports spiked by 17-49% as the supply of raw materials was disrupted. Cable makers, OEMs, electrical manufacturers and construction suppliers scrambled to secure material in more processed (and more expensive) forms.

Trade bodies had forewarned of the supply chain risks. Excessive QCOs distort markets by artificially limiting suppliers. Eliminating such input-level QCOs strengthens MSME supply chains by restoring flexibility and bargaining power, allowing firms to switch suppliers more easily, reduce risk and diversify their sourcing.

Firms must be allowed to choose inputs based on commercial logic rather than regulatory requirements. This will enable better decisions on what to indigenize and what to source globally. We must remember that ‘global value chains’ are called so for a reason.

Also, markets self-regulate, inefficient players exit naturally and high-quality suppliers rise on merit rather than certification gatekeeping. As Jagdish Bhagwati asserts, “Competition is the most reliable auditor of quality."

India’s QCO rationalization agenda should continue to address the raw-material QCOs concentrated across key ministries. According to CSEP, the ministry of steel oversees 310 QCOs, of which nearly 68% apply to input materials.

With the withdrawal of QCOs on 55 steel-based input materials and a one-year waiver on speciality steels, the government has made a strong start. But much more remains to be done, particularly in suspending QCOs on other input materials. Further, it is estimated that 161 QCOs are in place for machinery and electricals, with 44% covering core industrial intermediaries.

In electronics, India achieved a record $2.4 billion in smartphone exports in October 2025, and overall electronic exports grew by over 47% in the first quarter of 2025-26. India’s metals, machinery, textiles and electronics sectors offer some of the strongest levers for accelerating manufacturing-led growth. QCOs on input components that India cannot yet manufacture at scale hinder competitiveness, elongate lead times and discourage global firms from shifting deeper parts of their supply chain to India. We must ensure policy recalibration happens before the damage becomes irreversible. We must abolish these QCOs at the earliest.

To prevent QCOs from becoming unintended trade barriers, India must institutionalize a permanent, data-driven QCO Review Framework. Every QCO should carry a mandatory 24-month sunset clause, requiring renewal only after a detailed analysis of domestic capacity, import dependency, HS-code trends, supplier concentration, price movements and export competitiveness. Structured MSME consultations and annual QCO impact statements must be institutionalized.

The Bureau of Indian Standards should simultaneously shift toward risk-based, globally aligned standard-setting, focusing its regulatory scrutiny on safety-critical final products rather than raw materials.

The recent notifications are not just a bureaucratic update; they are a policy signal, a philosophical shift and a firm step towards a more competitive, export-ready India. QCO reform must move beyond the initiative of a few ministries to become a whole-of-government mission. Now is the moment for other ministries to follow suit.

QCOs on all raw materials and intermediates must be abolished. We cannot achieve our aspirations to become a world-leading economy by 2047 with regulatory sandbags tied to the ankles of our MSMEs. Reducing compliance costs, saving time and easing the regulatory burden are not administrative niceties; they are the levers that will catapult India into the next orbit of industrial expansion.

These are the authors’ personal views.

The authors are, respectively, chairperson and director, Fairfax Centre for Free Enterprise.