India's Double-Certification Trap

Quality control orders (QCOs) were meant to protect product quality, but now they manipulate competition in India's market.

- AJAY SRIVASTAVA

Earlier, anyone could import goods by paying import duty or obtaining a license. Now, the Bureau of Indian Standards (BIS) decides who can import and from which factory—and the rules can change overnight. This makes compliance costly, reduces the number of suppliers, and risks creating a system even worse than the old licensing raj. Small businesses lose out to bigger companies with more influence.

A recent example is the steel ministry's June 13 order. It requires not only finished and semi-finished steel products, but also the raw materials used to make them, to have a BIS quality certificate. The rule took effect with barely one working day's notice, causing shipments to be stuck at ports, contracts to be cancelled, and court cases to be filed.

The steel order is not a one-off—it's part of a growing trend where QCOs are used to shape markets and favor certain players. Let's examine the steel order through a case study.

Case study: A small Indian firm imports stainless-steel products from Factory X in Indonesia. Such imports fall under India's Foreign Manufacturer Certification Scheme (FMCS), which allows the BIS to inspect and certify foreign factories exporting to India. Under FMCS, BIS auditors visit the overseas facility to verify that production processes and raw materials meet Indian Standards (IS). Once satisfied, BIS issues a license allowing the factory to affix the ISI mark, subject to regular surveillance.

Factory X sources hot-rolled coils from a Thai supplier. Previously, the supplier's certification status did not matter; as long as Factory X's final products met BIS norms, they could be exported to India.