Undoing the damage is not reform

India’s recent rollback of quality control orders (QCOs) has been greeted with relief and, in some quarters, applause. The government has begun dismantling a regulatory regime that disrupted supply chains, raised costs for exporters, and generated trade friction abroad. Inputs in textiles, steel and chemicals have been among the first to see reversals. In a difficult global environment, stepping back from policies that weaken competitiveness is simply sensible.

- ABHISHEK ANAND

(ABHISHEK ANAND)

But to celebrate rollback as reform is to mistake damage control for progress. The QCO episode is best understood not as an isolated error but asasymptom ofa deeper problem in India’s economic governance: Inward-looking interventions followed bybelated recognition of their costs and eventual retreat — often presented as pragmatism. The same dynamic has played out across economic policymaking, from a needlessly convoluted goods and services tax (GST) structure that is only now being simplified to the effective soft-pegging of the rupee in 2022-23 and its subsequent quiet unwinding. Thisarticle focuseson trade, but QCOs belongtoa wider and recurring policy syndrome.

QCOs provide a convenient case study because their rise and fall have been unusually swift and visible. Although they have existed for decades, they were used sparingly until after 2020. Their numbers then surged dramatically, effectively turning them into non-tariff trade barriers. By restricting access to imported intermediate inputs, they raised production costs and hit export-oriented sectors the hardest.