Withdrawal of QCOs eases costs for MSMEs, but opens floodgates to cheap Chinese imports: GTRI

New Delhi [India], November 21 (ANI): India's decision to withdraw Quality Control Orders (QCOs) on more than 25 industrial raw materials is likely to ease compliance burdens and reduce costs for MSMEs, but the move risks unleashing a wave of low-priced imports from China, said Global Trade Research Initiative (GTRI) in a latest report on Friday.

The report further warned that while the rollback corrects years of regulatory overreach, the abrupt nature of the withdrawal leaves domestic manufacturers exposed at a time when anti-dumping duties have also lapsed, creating what GTRI calls a "protection vacuum."

GTRI in its report suggested that India needs a phased QCO reset backed by real-time import monitoring and swift trade-remedy action to prevent predatory pricing and safeguard upstream capacity while keeping input costs competitive for user industry, small firms, exporters.

Coming into effect from November 13, the government removed mandatory BIS certification for critical inputs in the textiles, plastics and metals sectors, including polypropylene, polyethylene, PVC, ABS, polycarbonate, Terephthalic Acid, Mono Ethylene Glycol, polyester and viscose fibres, aluminium, zinc, tin, lead and nickel.

This marked the first major rollback of a QCO system that ballooned from 14 items in 2017 to nearly 800 by 2025. Initially intended for consumer-facing products and safety-critical goods, QCOs expanded into basic industrial inputs where no inherent safety risk existed, GTRI said.

The move, GTRI highlighted, resulted in removing port delays, higher working-capital requirements, and raw-material prices that were 15-20% above global levels, hurting downstream industries ranging from textiles to packaging and engineering plastics.

However, the abrupt withdrawal has created a protection gap. Domestic producers of polymers, man-made fibres and non-ferrous metals had relied on QCOs, and earlier, anti-dumping duties, to offset India's well-known cost disadvantages in power, logistics and finance. Both protections have now vanished, the report mentioned.

GTRI also suggested some guardrails that are required to prevent the import flood. It said, to mitigate these risks, India must immediately put in place a targeted import-management strategy.

DGTR should adopt real-time monitoring of import prices and volumes, so that early signs of dumping from China trigger swift trade-remedy action.

For sectors like polymers, aluminium and specialty fibres where India is still building scale, the government should offer time-bound transition support, such as competitive power rates, logistics facilitation and technology upgrading, to ensure domestic producers are not displaced before they become globally competitive, GTRI said. (ANI)

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