High QCO Testing Costs Detrimental To MSMEs

Chennai: High testing costs to obtain Quality Control Orders for intermediary products is becoming a barrier for MSME importers.

High BIS compliance costs under QCOs favour large importers and may force smaller importers to shut shop. Without reform, India’s QCO framework risks becoming a protectionist compliance barrier benefiting only deep-pocketed firms, finds GTRI.

“A BIS-recognised laboratory charged a Vietnamese supplier $605 or about Rs 57,000 per sample to test ordinary industrial screws. For 29 samples, the total testing bill came to $17,545, or around Rs 16.5 lakh,’ it said.

The charges arise under the Foreign Manufacturers Certification Scheme (FMCS) of the Bureau of Indian Standards (BIS), under which foreign manufacturers of products covered by India’s Quality Control Orders (QCOs) must obtain BIS certification before exporting to India. The process requires foreign suppliers to appoint an Authorised Indian Representative, submit technical documents, undergo BIS factory inspections, provide samples for testing at BIS-approved labs, and secure a BIS licence before exports can commence.

India has rapidly expanded QCO coverage across hundreds of product categories in recent years. While the policy aims to improve product quality and consumer safety, GTRI warns that the pace of expansion has outstripped testing infrastructure and created significant compliance bottlenecks.

"This whole mechanism of foreign certification is a newly brought out license raj, wherein rent seeking has seeped into every level of the system. Any product under QCO should be brought only after proper due diligence of the domestic production vs demand vs idle capacity,” said Shaunak Rungta, Central Executive Committee Member, FISME India.

“Large firms may survive such compliance costs. MSME importers will simply shut shop,” GTRI said.