MSMEs demand supportive compliance frameworks as QCO burden mounts

Time of India

30-05-2025

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New Delhi: As concerns mount regarding the enforcement of mandatory quality control orders (QCOs), small businesses in the country have asserted that compliance frameworks should be designed to support MSMEs rather than stifle their growth while recognising the importance of standardisation for global competitiveness.The India SME Forum organised a high-level dialogue this week under the theme 'Bharat Quality Mission: Enabling MSME s for Global Competitiveness'. The event brought together MSME stakeholders, industry associations, and policymakers to collectively advocate for reforms in the QCO implementation process. Vinod Kumar , President of the India SME Forum, stressed the need for a more balanced and inclusive regulatory approach. He emphasised that nearly 97% of India's enterprises are micro and small businesses, which are disproportionately affected by the current QCO regime.'We have reached a point where domestic manufacturers, especially MSMEs, are under intense regulatory scrutiny for components and inputs, while finished goods continue to enter India with minimal checks at ports,' he said, noting that this asymmetry creates a serious disadvantage for local producers.Kumar pointed out that the abrupt QCO imposition on raw materials and components has disrupted supply chains, increased production costs, and reduced access to essential inputs across sectors like electronics, food processing, and textiles.'Our entrepreneurs want to comply and produce high-quality goods. But without adequate testing infrastructure or access to global-standard labs, compliance becomes both expensive and time-consuming,' he said. In some cases, an MSME in Pune is required to send samples to Bhopal just to test electrical components—such a gap hinders business and growth, he explained.Notably, the Indian government is implementing quality control orders (QCOs) across various industries to enhance product quality and safety. Currently, the government of India does not have a single, unified timeline for enforcing QCOs across all industries. Instead, each QCO is issued by the relevant ministry or regulator for specific products or sectors, and the enforcement date is explicitly stated in each order. For example, the QCO for certain electrical appliances has been extended to March 19, 2026, with further extensions for small and micro enterprises. In the chemicals sector, deadlines have also been adjusted through amendments, sometimes providing up to a six-month extension. Other products, like hinges, have specific implementation dates listed in their respective QCO.ISF President, in his address, also flagged disparities between online and offline sellers, noting that e-commerce sellers often face stricter compliance requirements, while offline sellers can bypass scrutiny. Additionally, widespread lack of awareness and the proliferation of fraudulent certification agents further complicate compliance for honest businesses. 'There are cases where MSMEs have been duped by consultants issuing fake certifications that hold no legal value. A robust mechanism is needed to verify certifications and prevent misuse,' Kumar said.He called for a phased roll-out of QCOs, especially for micro-enterprises and existing inventories, as well as exemptions and financial support for the smallest firms. Aligning Indian standards with globally accepted certifications, he said, would streamline exports and reduce redundant testing.'Compliance should not be a barrier to growth. If an MSME holds a CE mark or equivalent global certification, that should be sufficient. We shouldn't need duplicative and costly processes to meet India-specific requirements,' he added.Citing the Prime Minister's vision of 'Zero Defect, Zero Effect', Kumar emphasised the need for inclusive and pragmatic policymaking that empowers MSMEs rather than constraining them. 'We need a national quality ecosystem that's collaborative, bringing together policymakers, certification bodies, marketplaces, and MSMEs. Our goal is to build a framework that enables, not penalises,' he said.To that end, the India SME Forum plans to run nationwide outreach programmes and certification camps to help 1.2 to 1.5 million MSMEs obtain quality certifications by the end of the year.Keynote speaker Nidhi Khare, Secretary, Department of Consumer Affairs, emphasised the need for a proper understanding of the intent behind QCOs and urged MSMEs to view them constructively. 'There is a need to correctly interpret the purpose of QCOs. Whatever fears MSMEs have must be addressed. Businesses must adapt logically and progressively, and where the government's support is needed to change processes, that will be provided,' she said.Khare also underlined that India's strict stance against substandard imports is attracting capital, technology, and jobs, making it essential for MSMEs to align with quality norms. To support this transition, she said the government is investing Rs 78 crore through BIS to expand testing infrastructure nationwide. 'QCOs are not just regulatory tools; they are enablers of export growth and manufacturing excellence,' she added.Khare highlighted the importance of roadmaps for each sector covered under QCOs and urged industry players to keep the relevant authorities informed of their implementation challenges.Saurabh Arora, President of the state branch of the Indian Pharmaceutical Association, flagged regulatory overlaps affecting the pharmaceutical and cosmetics industries. He noted that while the Drugs and Cosmetics Act already mandates robust standards, particularly through the Indian Pharmacopoeia, recent QCOs have created confusion and imposed dual compliance requirements. 'Ingredients regulated under stricter pharmacopoeial standards are now also subject to BIS QCOs with more lenient norms, creating unnecessary complications,' Arora said. A pharmacopoeia is an official, legally binding book that sets standards for the quality, identity, purity, and strength of medicines, including active pharmaceutical ingredients, excipients, and finished pharmaceutical products.Suggesting a solution, Arora called for clearer exemptions for pharma-grade inputs and the creation of category-specific standards for cosmetics. 'Testing a face serum under lotion standards leads to inaccurate results. The government must develop vertical product standards or ensure appropriate horizontal benchmarks,' he said.He further urged recognition of existing pharma-grade standards under the Drugs and Cosmetics Act to avoid dual compliance and called for greater coordination between BIS and sector regulators. 'Compliance must be meaningful. It should support industry growth while maintaining quality and safety,' he stressed.Jaideep N Malaviya, Founder-Secretary General of the Solar Thermal Federation of India, lauded the QCOs introduced for solar water heating systems on April 14, but flagged major implementation issues.He said regional BIS offices remain unaware of updated product structures and testing guidelines. 'There's a disconnect between policy-level updates and on-ground implementation. Portals reflect outdated information, leading to confusion during testing,' he highlighted.Malaviya urged BIS to adopt a supportive approach during the transition period and avoid penalising companies trying to comply. 'Despite QCOs being in effect, most consumers are unaware of the new standards. This information vacuum is exploited by fly-by-night operators selling substandard products,' he said.One of the key sessions featured Ramaswami Lakshman, Director of Emerging Markets, FBA at Amazon. He said digitisation has the power to level the playing field for MSMEs. We are committed to helping Indian sellers, especially from tier II and III cities—navigate compliance, improve quality, and reach customers domestically and globally. Over 12 million MSMEs have already been digitised through our initiatives,' he said, adding programmes, such as the Bharat Quality Mission, are essential for shaping policy frameworks that unlock the potential of small businesses.The event concluded with the submission of a detailed policy recommendation dossier to the Ministry of Consumer Affairs Ministry of MSME , Bureau of Indian Standards (BIS), and the Department for Promotion of Industry and Internal Trade (DPIIT). The key proposals included a phased implementation of QCOs, improved access to testing infrastructure, harmonisation with global certification norms and financial and capacity-building support for small businesses.