MSME relief on cards: Former Cab Secy led panel to suggest overhaul of Quality Control Orders

MSME Relief on Cards: Former Cabinet Secretary-Led Panel to Suggest Overhaul of Quality Control Orders

A high-level reform push is underway to ease regulatory burdens on India’s micro, small and medium enterprises (MSMEs), with a panel led by a former Cabinet Secretary proposing major changes to the Quality Control Orders (QCOs) regime. The aim: balance quality standards with ease of doing business, so MSMEs are less burdened by expensive compliance norms while still upholding safety, import standards, and consumer protection.

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What are Quality Control Orders (QCOs)

• QCOs are legal mandates under the Bureau of Indian Standards (BIS) Act. They specify criteria that must be met by both domestic and imported products before they can be produced, sold, traded, or stocked. Non-conforming products are not permitted in the market. The Indian Express+2The Hindu+2

• They exist in order to ensure product safety, prevent substandard imports, and provide consumer protection. The Hindu+1

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Challenges Faced by MSMEs under Current QCO Regime

Several MSME stakeholders and policy analysts have raised concerns that QCOs in their current form act as non-tariff barriers:

1. High number and expanding scope

   • Over the past three years, BIS has issued 84 QCOs covering 343 products, which is nearly 45% of all 187 QCOs on record. The Indian Express+1

   • Products under QCOs range widely: water bottles, helmets, furniture, ceiling fans, stainless steel pipes, solar thermal systems, agro-textiles, etc. The Indian Express+1

2. Cost of compliance, especially for inputs and imported components

   • MSMEs are complaining that for raw materials and components that are imported, mandatory conformities (testing, certification) often increase costs significantly. The Indian Express+1

   • Some QCOs make it difficult for MSMEs to source cheaper foreign inputs, pushing them to buy more expensive domestic substitutes. The Indian Express+1

3. Regulatory uncertainty & enforcement burdens

   • Many MSMEs report lack of clarity about which QCOs apply to their products, changing norms, inadequate transitional timelines. mint+2The Indian Express+2

   • Inventory made before notification of a QCO may become non-sellable or be non-compliant in future. mint

4. Sectoral fragmentation and multiplicity of schemes

   • Technical conformity assessment by BIS is based on many “schemes” with different levels of rigour. For example, “Scheme I” involves factory audits and proactive surveillance (factory + market), while “Scheme II” has lighter requirements (desk audits, selected sampling, etc.). The multiplicity adds complexity. The Indian Express

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What the Panel Proposes

A committee headed by former Cabinet Secretary (Rajiv Gauba), within the High-Level Committee on Non-Financial Regulatory Reforms (HLC-NFRR), has finalised some recommendations aimed at rationalising and making the QCO regime more MSME-friendly. Key suggestions include:

1. Reducing the number of technical conformity assessment schemes

   • From the current ~10 schemes to just two:
     • A simplified scheme for less-risky products
     • A more thorough/rigorous scheme for higher-risk products. The Indian Express

2. Shift in inspection focus

   • Move from heavy reliance on factory inspections to more market inspections. The idea is market surveys, checks at distribution/points of sale may be more efficient in catching non-conformity, especially for imports and counterfeit goods. The Indian Express

3. Addressing input import challenges

   • For inputs/components/raw materials that cannot be made domestically (or are more expensive domestically), reduce or relax overly stringent standards, or allow alternate conformity assessment paths. The Indian Express+1

4. License duration, validity, and alternative oversight

   • Extend the period of license validity or even make some indefinite, with periodic or alternative modes of inspection/oversight rather than continuous burdensome checks. The Indian Express

5. Consolidation of guidelines and notifications

   • Simplify and bring consistency: fewer overlapping or conflicting orders, clearer timelines and compliance paths. The Indian Express

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Positives and Potential Benefits

• Reduced cost for MSMEs: Especially in sectors dependent on imported inputs, raw materials, or components. Lower compliance costs can improve margins or competitiveness.

• Better market access and fairness: If regulations are made more predictable and less burdensome, small enterprises can plan investment and exports with less regulatory risk.

• Promoting trade and exports: MSMEs often are part of export value chains; fewer non-tariff obstacles and cheaper inputs can increase export competitiveness.

• Efficiency in regulation: Fewer schemes and more market-based inspections could lower regulatory administration costs—for both firms and the government.

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Risks and Concerns

• Quality and safety risks: Diluting conformity assessment or skipping factory inspections might create loopholes for low-quality, unsafe or counterfeit products to enter the market. Consumer safety, environmental standards must not be compromised.

• Implementation and transition issues: Past experience suggests that without clear timelines, support infrastructure (testing labs, accreditation, dissemination of standards), MSMEs could struggle even with simpler norms.

• Potential for regulatory arbitrage: Bigger firms may find ways to game the system; if new schemes are not carefully designed, smaller players might not fully benefit.

• Enforcement capacity: Moving to market surveillance requires strong enforcement mechanisms in the field; adequate resources and institutional capacity must be ensured.

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Where Things Stand Now

• The HLC-NFRR finalised these recommendations in a meeting on 6 September 2025. The Indian Express

• Officials from MSME Ministry, BIS, NITI Aayog, and industry bodies like CII and ASSOCHAM participated. The Indian Express

• There are already 187 QCOs notified by BIS covering around 770+ products. The Indian Express+1

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What Needs to Be Watched Going Forward

• Whether the government accepts the recommendations in full or makes only partial modifications.

• The drafting of rules for the new two-scheme model: which products fall under which scheme, what risk assessment criteria are used.

• Timelines for transitioning existing QCOs to the new regime; clarity on grandfathering existing products/inventories.

• Support systems: testing infrastructure, capacity building, advisory mechanisms for MSMEs.

• Monitoring and accountability mechanisms so that relaxations do not degrade product quality or hurt consumer safety.

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Conclusion

The proposal to overhaul the Quality Control Orders regime has potential to deliver meaningful relief for MSMEs—especially those hurt by high compliance costs, complex schemes, and ambiguity. If implemented well, with strong transitional support, the new regime could balance two imperatives: ensuring product quality and safety, while making regulation more MSME-friendly.

For MSME business owners, this is a welcome signal. But the devil will be in the details: how the new rules are framed, enforced, and how well MSMEs are equipped to adapt. Stakeholders should follow developments closely, engage in any consultation processes, and prepare for both opportunities and risks that the changeover may bring.