Focus on Quality; Export Competitiveness Won’t Come from Govt Subsidies: Goyal to Industry

Focus on Quality; Export Competitiveness Won’t Come from Govt Subsidies: Goyal to Industry

Sub : Eco

Sec: External Sector

• Quality Over Subsidies:
  • Commerce and Industry Minister Piyush Goyal emphasized that export competitiveness should not rely on government subsidies. Instead, it should come from the industry’s focus on high-quality products.
  • He highlighted that self-reliance and self-confidence will be achieved when industries see quality as a duty, not just a job.
• Government’s Efforts:
  • The government is implementing steps like Quality Control Orders (QCOs) to boost the manufacturing sector.
  • Initially, there was resistance from the industry, but the government is pushing for the adoption of quality standards.
• Growth in Quality Control Orders (QCOs):
  • Till 2014, only 14 QCOs were issued covering 106 products.
  • In the last decade, this number increased significantly to 174 QCOs, now covering 732 products.
  • These QCOs aim to curb the import of sub-standard products, prevent unfair trade practices, and ensure consumer safety.
• Strict Compliance:
  • As per QCOs, products cannot be produced, sold, or imported without the Bureau of Indian Standards (BIS) mark.
  • Violations can result in up to two years of imprisonment or a fine starting at ₹2 lakh. Repeat offenses will lead to heavier fines, up to 10 times the value of the goods.
• Global Recognition:
  • The government wants India to be recognized as a manufacturer of high-quality goods and services on the global stage.
  • Goyal encouraged industry players to guide and support MSMEs in achieving higher quality standards, particularly citing the pharma sector as an area needing improvement.
• Industry Participation:
  • Goyal urged industries to participate in BIS committees by providing skilled technical manpower, ensuring better alignment with quality standards.
  • He also pointed out that India’s efforts to join global protocols in sectors like pharma have been hindered by resistance to adhering to stringent standards.
• QCOs and WTO Compliance:
  • The issuance of QCOs is in line with the WTO Agreement on Technical Barriers to Trade, ensuring that quality standards are met without violating international trade rules.

The emphasis is on quality assurance, collaboration between large enterprises and MSMEs, and strict adherence to standards to elevate India’s manufacturing capabilities and export competitiveness.

Factors Affecting Export Competitiveness 

• Cost Competitiveness:
  • Production Costs
  • Wage Levels
  • Economies of Scale
• Exchange Rate:
  • Currency Value
  • Exchange Rate Stability
• Product Quality and Innovation
  • Quality Standards
  • Innovation and Technology
• Infrastructure:
  • Transport and Logistics
  • Energy Supply
  • Digital Infrastructure
• Government Policies:
  • Export Incentives
  • Trade Agreements
  • Ease of Doing Business
• Access to Raw Materials:
  • Availability of Raw Materials
  • Diverse Supply Chain
• Skilled Workforce:
  • Technical Skills
  • Training and Education
• Market Diversification:
  • Geographical Spread
  • Product Diversification
• Global Economic Conditions:
  • Global Demand
  • Trade Barriers and Protectionism
• Branding and Marketing:
  • Brand Recognition
  • Effective Marketing Strategies
• Environmental and Ethical Practices:
  • Sustainability
  • Ethical Standards

Quality Control Orders (QCOs)

• Definition:
  • Quality Control Orders (QCOs) are regulatory measures introduced by the government to establish quality standards for specific products or product categories.
  • These orders ensure that products meet certain prescribed quality, safety, and performance requirements before they can be manufactured, imported, stored, or sold in the country.
• Objective:
  • The primary aim of QCOs is to control the import of sub-standard and cheaper items into the domestic market.
  • It ensures that customers have access to quality products that meet the necessary standards, thus enhancing consumer protection and market integrity.
• Regulatory Compliance:
  • Under the QCOs, manufacturing, storing, and sale of products that do not comply with the standards set by QCOs is prohibited.
  • The Bureau of Indian Standards (BIS) plays a crucial role in ensuring compliance with the quality standards established under QCOs.
  • BIS is responsible for certifying products that meet these standards for both domestic and international manufacturers.
  • As per the BIS Act, 2016, any non-BIS certified products are restricted from being sold, ensuring adherence to the quality framework.
• Legal Framework:
  • QCOs cannot be challenged at the World Trade Organization (WTO) if they are imposed on grounds related to:
    • Health
    • Safety
    • Environmental protection
    • Deceptive trade practices
    • National security
  • This provision allows the government to enforce QCOs without violating international trade agreements, given that the regulations align with globally recognized standards for health and safety.