FDI, trade diversification can boost export competitiveness where QCOs failed, Pg15

Key Highlights:

• The government is overhauling the standards framework by revoking Quality Control Orders (QCOs) on industrial inputs like copper and aluminium.
• MSMEs faced challenges due to increased import costs of essential inputs because of QCOs, impacting their competitiveness.
• A Niti Aayog report highlighted that most QCOs cover raw materials, causing operational complexity for MSMEs and market concentration.
• The number of products under mandatory QCO coverage increased from fewer than 70 to nearly 790 between 2016 and 2025.

Detailed Insights:

• The increase in QCOs was driven by the Department of Commerce to manage the growing trade deficit and align with international standards.
• The implementation of QCOs led to market concentration, benefiting large corporations and enabling them to raise prices above global levels.
• Niti Aayog noted that QCOs have affected the competitiveness of export-intensive sectors like footwear and electronics, impacting millions of jobs.
• A WTO report suggests that trade liberalization leads to faster quality upgrading, but QCOs caused a decline in raw material availability for MSMEs.
• Addressing the gap in skilled manpower for implementing regulatory standards is crucial for ensuring effective QCO compliance across the value chain.

Key Concepts Involved:

• Quality Control Orders (QCOs): Mandatory standards restricting import, manufacturing, distribution, or sale of products without a Standard Mark from BIS.
• MSMEs (Micro, Small and Medium Enterprises): Businesses that face specific challenges due to QCOs, including increased import costs and compliance burdens.
• Trade Liberalization: The process of reducing barriers to international trade, potentially leading to faster quality upgrading in manufacturing and agriculture.