The order permits eligible manufacturers in selected sectors – including toys, footwear and air‑conditioners – to temporarily source products from suppliers licensed under BIS Scheme‑II, provided they obtain approval from a DPIIT‑constituted committee and meet prescribed eligibility criteria.
The move follows a sharp slowdown in the expansion of India’s Quality Control Orders (QCOs) after 2025. While the number of products covered by QCOs surged from 88 in 2019 to 765 by the end of December 2024, the government began revoking or suspending several QCOs, especially those governing intermediate goods, after concerns emerged that mandatory certification was inflating input costs and threatening supply‑chain continuity.
India’s QCO regime has drawn criticism from major trading partners. During the WTO’s eighth Trade Policy Review of India in July 2026, the European Union, the United States and BRICS members Brazil, China and Indonesia flagged the orders as non‑tariff barriers that could hinder market access.
A recent study by the Centre for Sustainable Economic Policy (CSEP) on chemical‑using firms illustrates the stakes. Between 2018 and 2024, the share of firms exposed to chemical‑related QCOs rose from 11.8% to 56.6%. Larger firms saw a 9.6% rise in production but a 37% drop in gross value added, suggesting higher input costs offset output gains. Smaller firms experienced no significant change in output or GVA but suffered a 47.6% plunge in profitability, underscoring their limited capacity to absorb compliance costs.
More than 600 products remain under QCO coverage, many of which are critical intermediate inputs for sectors such as chemicals, steel, textiles, machinery, electronics, rubber and plastics. Analysts argue that the next phase of QCO rationalisation must prioritize these intermediates, evaluating not only product quality but also the impact on input availability, cost competitiveness and domestic value addition.
The government’s new order is presented as a “welcome step” toward reducing the risk that quality regulations unintentionally disrupt supply chains or constrain domestic manufacturing. However, experts stress that additional measures – such as dedicated assistance for micro, small and medium enterprises (MSMEs) and targeted exemptions or transition periods – will be needed to prevent disproportionate burdens on smaller players as India pursues its Viksit Bharat 2047 vision.