Interventionist policy

QCOs should not hurt Indian producers

The government has stated in recent years that India is taking a pragmatic approach to trade and economic integration. It has sought better utilization of existing free-trade agreements and looked for new ones to sign. Partly this is because it recognizes that, for manufacturing to grow, India must become part of global value chains. Yet, at the same time, it has introduced a new licence-permit system that traders in multiple sectors must deal with. The number of "quality control orders", or QCOs, has multiplied. These restrict imports of goods unless various certifications are obtained, particularly from the Bureau of Indian Standards (BIS). The government's justification is that Indian consumers need to be protected from substandard goods; it is also likely the case that this is used informally to minimize the presence of Chinese manufacturing in Indian supply chains.

But the fact is that a new set of non-tariff barriers have been erected and they are antithetical to consumer interests and hurt both traders and manufacturers.