Context:
India is implementing a pragmatic approach to trade and economic integration, utilizing existing free trade agreements and seeking new ones.
- Quality Control Orders” (QCOs)
- The government has introduced a new license permit system, introducing “quality control orders” (QCOs) to restrict imports of goods unless certifications are obtained.
- The QCOs are seen as a protection against substandard goods and to minimize the presence of Chinese manufacturing in Indian supply chains.
- Impact of QCOs
- The introduction of nontariff barriers, such as QCOs, is harmful to consumer interests and hurts both traders and manufacturers.
- The overuse of QCOs has affected steel dumping by China, affecting other manufacturing companies that require imported or speciality steel.
- The bureaucratic hurdles for importers, even if not covered by QCOs, lead to inferior quality steel and reduced competitiveness.
- The QCOs are particularly harmful to small and medium enterprises, making them comparatively costly and their goods of poorer quality.
Way Forward
- The government’s priority is to expand markets for micro, small, and medium enterprises (MSMEs) and enable their entry into global value chains.
- The arbitrary QCO regime will reduce investment in manufacturing in India and will result in a return to a bureaucratic foreigntrade policy.
