Centre shifts QCO policy, rolls out transition framework for manufacturers

Centre shifts QCO policy, rolls out transition framework for manufacturers

Theindiapostdaily.com – On Thursday, the Indian government unveiled a new transition system within the quality control framework, enabling firms with short-term supply challenges to source goods from non-qualified producers under specific QCOs without needing multiple exemptions. This initiative seeks to minimize disruptions in the supply chain while ensuring adherence to mandatory quality benchmarks. The decision emerged from a government review of the QCO regime, prompted by industry feedback regarding its execution. NITI Aayog endorsed a framework that prioritizes predictability and supports manufacturing, maintaining product quality and consumer safety.

Eligibility and Process

The Transition Facilitation (Quality Control) Order, 2026, issued by the Department for Promotion of Industry and Internal Trade (DPIIT), outlines the rules for temporary sourcing permissions. Under this order, eligible businesses can procure items covered by mandatory QCOs from manufacturers who typically wouldn’t meet the standards, provided they meet Indian Standards. To qualify, companies must be incorporated under the Companies Act, 2013, and pass a risk assessment by an inter-ministerial committee.

Committee Responsibilities

The committee includes representatives from DPIIT, the Department of Consumer Affairs, the Department of Commerce, the Directorate General of Foreign Trade (DGFT), and the Bureau of Indian Standards (BIS). It evaluates applicants based on technical expertise, quality assurance systems, compliance history, supply-chain management, and their dedication to enhancing domestic manufacturing through technology, design, and R&D. Firms that consistently followed QCOs for at least three years without lapses might also be granted permissions.

Compliance and Oversight

Products sourced via the framework must align with applicable Indian Standards. BIS, working with DPIIT, will conduct market surveillance to confirm ongoing compliance. The Centre reserves the right to suspend, adjust, or revoke approvals if conditions are breached, details are misrepresented, or standards are not met. The transition mechanism accepts applications for 24 months, and the framework will remain active for five years unless extended.

As of now, 713 QCOs are in effect. Prior to the withdrawal and expansion of QCOs, 353 were managed by DPIIT, 152 by the Ministry of Steel, 77 by the Department of Chemicals and Petrochemicals, 76 by the Ministry of Textiles, 64 by the Ministry of Electronics and IT, and 14 by the Ministry of Heavy Industries, as reported by Mint on 10 February 2025.

In 2025, the government eliminated 50 QCOs from the original 761, following a high-level committee’s suggestion on non-financial regulatory reforms led by NITI Aayog’s Rajiv Gauba. This adjustment reflects efforts to streamline the regime while balancing quality requirements with industry needs. DPIIT has also announced plans to release detailed operational guidelines covering documentation, eligibility criteria, monitoring, and compliance measures.