QCO Forces Jaipur-Based Firm To Redraw Biz Plan, MSME Industry Body Urges Govt To Defer Order

(MENAFN- KNN India) New Delhi, Jan 24 (KNN) A quality control order (QCO) intended to strengthen domestic manufacturing has derailed the business of a Jaipur-based MSME firm, prompting the industry body Federation of Indian Micro and Small & Medium Enterprises (FISME) to urge the government to defer the enforcement of contentious directive.

"Our turnover has plummeted fr0m Rs 18 crore in the financial year 2024-25 to Rs 3.5 crore in the current fiscal. In terms of volume, it has come down to just 8 tonnes of fasteners fr0m 60 tonnes per month earlier," said Shaunak Rungta, Director at Vardhan group which deals in hardware fittings.

Rungta appeared quite frustrated given his recent struggle to get his fastener consignment cleared fr0m the port. He could secure the shipment only after getting a one-time exemption fr0m Cross Recessed Screws (Quality Control) order 2025.

Miffed by the unpleasant experience of running through bureaucratic web to get clearance for the China-originated consignment, Rungta is now planning to enter new business where there are fewer restrictions or regulations.

"We have no issues with the QCO. The intent of QCO is quality control. It should not act as a trade barrier. We have maintained that QCO should only be about quality and it can be checked at ports also. There could be a system in place for third party audit or verifying quality by checking containers. The other issue is about restricting imports fr0m China. Here also we don't have any issue provided it is not selective. It cannot happen that bigger players are allowed while smaller players are not permitted to import," the young entrepreneur said.

Meanwhile, industry body FISME has requested the Ministry of Steel to consider deferring or rescinding the QCO implementation for Cross Recessed Screws until such time that domestic capacities are demonstrably adequate and quality consistency is achieved.

"Despite concerted efforts to source supplies fr0m multiple domestic companies we have been able to procure less than 30 per cent of our monthly requirement since the QCO kicked in. This situation threatens the viability of MSME trading businesses and disrupts the continuity of several dependent industrial sectors," said an executive fr0m a MSME firm.

Speaking on the QCO issue, India SME Forum President Vinod Kumar said, "Many of my members have raised issues around QCOs and in some cases their contention is valid. While their businesses have been hit by quality control orders, we believe the impact is temporary. In the long run, things will fall in place as they change their business model. The government on its part has modified certain QCOs and some have been put on hold. Moreover, new QCOs are not being issued. This has given businesses the opportunity to prepare themselves for the new reality."

He further added, "The countries around the world post Covid have realised the need for a reliable supply chain and also the urgency to move away fr0m single source to multiple source of supplies. We agree that certain QCOs have been knee-jerk but eventually we have to substitute all our avoidable imports. QCOs are definitely needed where dumping is happening but it should certainly not be used as a trade barrier."

A government-appointed panel led by NITI Aayog member Rajiv Gauba is believed to have recommended withdrawal of many of the QCOs in order to ensure supply of key raw materials and reduce compliance costs especially for MSMEs.

The panel has proposed to cancel, suspend or defer QCOs for over 200 products. It has proposed scrapping 27 QCOs on various products such as plastics, polymers, base metals, footwear and electronic components, while suspending or deferring orders on more than 100 others.

(KNN / Nirbhay Kumar)

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