India Revokes Quality Controls Impacting Textile Exports

India’s Ministry of Chemicals and Fertilisers recently revoked quality control orders (QCOs) on 14 key chemical intermediates and synthetic fibres vital to the textile industry. This move follows severe export setbacks caused by a 50 per cent tariff imposed by the United States on Indian textile products. The rollback aims to ease operational challenges and cost burdens faced by textile manufacturers, especially Micro, Small and Medium Enterprises (MSMEs).

and Export Impact

The US is India’s largest market for textiles, accounting for nearly 28 per cent of export revenues. The 50 per cent tariff, effective from August 2025, led to a 10.34 per cent decline in textile and apparel exports to the US in September 2025 compared to the previous year. This has created stress on India’s textile manufacturing sector, which relies heavily on imported raw materials and intermediates affected by QCOs.

Role and Scope of Quality Control Orders

QCOs are mandatory standards set by the Bureau of Indian Standards (BIS) to ensure product quality and consumer safety. Since 2016, the number of products under QCOs surged from under 70 to nearly 790 by 2025. Most new QCOs target raw materials, intermediates, and capital goods rather than finished products. While intended to boost Made-in-India quality, these regulations have complicated supply chains and increased costs for manufacturers.

Challenges Faced by the Textile Sector

Textile MSMEs brought into light higher input costs and certification hurdles due to QCOs. Many raw materials such as Terephthalic Acid, Ethylene Glycol, Polyester Industrial Yarn, and Polyester Staple Fibres are imported. QCOs limit the number of certified suppliers, causing price increases of 10 to 30 per cent over global benchmarks. This reduces export competitiveness as firms cannot claim exemptions on imported inputs.

Niti Aayog’s Recommendations

An internal Niti Aayog report identified that applying QCOs to intermediates rather than finished goods creates operational complexities. The report recommended revoking QCOs on 27 products and suspending or deferring many others. It noted that synthetic fibres and yarns do not pose direct health risks and that finished products requiring safety tests are already regulated separately. The report also stressed that no major textile-exporting country enforces mandatory factory-level certification on intermediates.

Impact on Domestic Supply and Imports

India has polyester production capacity but lacks specialised grades demanded by export markets. Viscose production is concentrated among few firms, causing dependence and supply shortages. The QCOs have reduced imports of specialised fibres not due to domestic substitution but because of certification barriers. This has forced downstream units to operate below capacity.

Future Outlook and Industry Expectations

Industry bodies expect further revocation of QCOs on products like viscose fibre and textile machinery. The Commerce Ministry noted that QCOs on other goods like toys and plywood have successfully curbed substandard imports. The textile sector hopes easing QCOs will restore competitiveness and support export recovery amid global trade challenges.

Questions for UPSC:

1. Discuss in the light of India’s textile export challenges how non-tariff barriers such as quality control orders affect international trade competitiveness.
2. Critically examine the role of regulatory frameworks like the Bureau of Indian Standards in balancing consumer safety and industrial growth in India.
3. Explain the impact of import dependency on raw materials for India’s manufacturing sectors and suggest measures to reduce such dependencies with suitable examples.
4. With suitable examples, discuss the significance of Micro, Small and Medium Enterprises (MSMEs) in India’s export economy and the challenges they face in a globalised market.

Answer Hints:

1. Discuss in the light of India’s textile export challenges how non-tariff barriers such as quality control orders affect international trade competitiveness.

1. QCOs increase raw material costs by 10-30% due to limited certified suppliers and licensing delays.
2. Mandatory standards on intermediates reduce import volumes, not by domestic substitution but certification hurdles.
3. Higher input costs cascade through the supply chain, reducing export competitiveness of apparel producers.
4. Non-tariff barriers add operational complexities, especially for MSMEs dependent on imported inputs.
5. Unlike India, major exporters (China, Vietnam, Bangladesh) rely on voluntary standards and buyer audits, enhancing flexibility.
6. QCOs aimed at quality inadvertently hamper exports by restricting access to specialized raw materials needed for global markets.

2. Critically examine the role of regulatory frameworks like the Bureau of Indian Standards in balancing consumer safety and industrial growth in India.

1. BIS sets mandatory QCOs to ensure product quality and protect consumer safety.
2. Expansion of QCOs from finished goods to raw materials and intermediates increased regulatory burden on industries.
3. While QCOs curb substandard imports (e.g., toys, plywood), they can raise costs and reduce competitiveness in export sectors.
4. QCOs on intermediates can cause supply shortages and operational inefficiencies for manufacturers.
5. Effective regulation requires balancing safety without stifling MSMEs and export-oriented industries.
6. Niti Aayog recommends revocation or suspension of QCOs where risks are low and finished goods are separately tested.

3. Explain the impact of import dependency on raw materials for India’s manufacturing sectors and suggest measures to reduce such dependencies with suitable examples.

1. India relies on imports for specialized raw materials like Terephthalic Acid, Ethylene Glycol, and certain synthetic fibres.
2. Import dependency leads to vulnerability to global supply disruptions and higher costs due to certification barriers.
3. Supply shortages force downstream units to operate below capacity, affecting production and exports.
4. Measures to reduce dependency include enhancing domestic production capacity and diversifying supplier base.
5. Encouraging technology transfer and investments in specialized grades (e.g., polyester blends) can fill supply gaps.
6. Policy support for MSMEs and easing regulatory hurdles can boost domestic manufacturing and reduce import reliance.

4. With suitable examples, discuss the significance of Micro, Small and Medium Enterprises (MSMEs) in India’s export economy and the challenges they face in a globalised market.

1. MSMEs form a backbone of India’s textile manufacturing, contributing to exports and employment.
2. They face higher input costs due to QCOs and certification complexities, impacting competitiveness.
3. Limited access to certified raw materials and long lead times increase operational challenges for MSMEs.
4. Global tariffs (e.g., 50% US tariff) and non-tariff barriers intensify pressures on MSMEs’ export viability.
5. MSMEs often lack scale and resources to absorb regulatory costs or invest in compliance infrastructure.
6. Supportive policies, easing regulatory burdens, and facilitating access to quality inputs are vital for MSME growth in exports.