The enforcement of product standards –Quality Control Orders (QCOs) and Compulsory Registration Orders (CROs) — has had a positive impact on the Indian economy and aided local manufacturing and higher spending on research and development, according to a report by a trade policy think tank.
The CRO on electronics and IT products including mobiles, mobile batteries and laptops that was implemented in 2012 led to a 15% increase in the domestic production in the year following the order. Similarly Industries affected by QCOs and CROs, such as electronics, textiles, and toys, have experienced growth rates of 8-10% annually post-implementation, compared to 4-5% growth before the regulations were enforced, according to a report by Global Trade Research Initiative.
Companies in sectors affected by QCOs have increased their spending on research and development by 20% on average. This investment aims to meet and exceed the required standards, fostering innovation and quality improvements, the report prepared by GTRI founder Ajay Srivastava said.
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He, however, clarified that the observations in the report are based on anecdotal evidence and reporting and a rigorous study is needed to ascertain benefits and challenges of QCOs and CROs.
The enforcement of QCOs and higher import duties has significantly reduced the import of substandard toys, with India’s global toy imports dropping from US$ 304.1 million in FY 2019 to US$ 64.9 million in FY 2024, and imports from China decreasing from US$ 264.6 million to US$ 41.5 million in the same period.
OCOs are mandatory standards set by Bureau of Indian Standards (BIS) that focus on detailed quality benchmarks. Manufacture and sale of such products which do not meet the quality standards lead to their seizure and action against the producers and importers. CROs are QCOs with additional requirements to register with the government agencies. CROs add another layer of verification to products.
India is on the fast track to issuing Quality Control Orders (QCOs) and Compulsory Registration Orders (CROs). This rapid issuance became possible through the introduction of the new BIS Act in October 2017, which simplified the process of notifying products, systems, and services that must meet specific standards.
Since introduction of the Act in 2017, over 140 QCOs have been issued for more than 550 products, compared to just 14 QCOs covering 106 products up to 2014.
India has fast tracked issuance of QCO, CROs, but it needs to augment each leg of the quality system. Small and medium enterprises need support to meet the standards prescribed in QCOs including their gradual implementation, financial assistance and technical guidance.
To further improve quality systems in India should adopt and align its standards with international ones to enhance export competitiveness and seek international accreditation for BIS certifications to avoid additional costs for manufacturers who otherwise have to shell extra for certification in overseas markets GTRI said.
BIS should seek accreditation to ensure that its certifications are internationally accepted. Currently, many regulations under the BIS Act are based on ISO/IEC standards, but BIS certification is generally not accepted internationally due to a lack of accreditation. Achieving international acceptance will help manufacturers avoid the additional costs of seeking certification from other agencies.
ISO and IEC are international standards that ensure products and services are safe, reliable and high quality. The report recommended signing Mutual Recognition Agreements (MRAs) with important trading partners as these agreements will help make domestic laws acceptable to countries with different regulations, facilitating smoother international trade.
The quality standards should regulate essential parameters only and technical regulations should focus on health, safety, and environmental aspects, regulating only the parameters related to these concerns rather than encompassing the entire product standards. However, many QCOs often regulate the entire product standard, not just the essential health, safety, and environmental parameters. This increases the cost of compliance.
According to GTRI the quality standards should ot play the role of non-tariff barriers. Many countries use the mandatory certification to check imports. China often uses this process to delay grant of permission for imports from specific countries.
From: financialexpress
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