High Testing Fees Turn Quality Rules into Trade Barrier

India’s expanding quality control regime is coming under scrutiny after a new report flagged sharply rising testing and certification costs as a potential barrier to trade—one that could disproportionately squeeze small importers and tilt the market in favor of large firms.

A study released on Monday by Ajay Srivastava of Global Trade Research Initiative (GTRI), points to a recent case where a foreign supplier was billed nearly ₹16.5 lakh to certify just 29 industrial screws under India’s Quality Control Orders (QCOs). The findings, analysts say, raise broader concerns about the cost structure embedded in the country’s standards enforcement regime.

Under the current framework, products notified under QCOs must be certified by the Bureau of Indian Standards before they can be imported. For foreign manufacturers, this involves testing at BIS-recognized laboratories, factory inspections, and the appointment of an authorized Indian representative under the Foreign Manufacturers Certification Scheme (FMCS).

In the case reviewed by GTRI, a Vietnamese supplier was charged about ₹57,000 per sample for routine mechanical testing of screws across three Indian standards. The tests—covering tensile strength, hardness, torque, and dimensional tolerances—are neither complex nor unusual for industrial fasteners. Yet, the cumulative cost, running into lakhs, has raised questions about proportionality.

“When certifying ordinary fasteners costs nearly as much as setting up a testing lab, the compliance system risks becoming excessive,” the report noted. Industry estimates suggest that establishing a basic mechanical testing facility would cost ₹25–30 lakh, putting a single certification exercise within striking distance of that investment.

The implications are uneven across the market. Larger importers, operating at scale, can amortize such compliance costs over high volumes. For micro, small and medium enterprises (MSMEs), however—particularly those dealing in low-volume or specialized imports—the upfront expense can render business models unviable.

“This effectively creates a high entry barrier,” GTRI said, warning that smaller firms may be forced to exit, leaving the field open to “deep-pocketed players” and increasing market concentration.

Industry voices have also raised concerns about regulatory design. Shaunak Rungta of the Federation of Indian Micro and Small & Medium Enterprises described the system as “a newly brought-out license raj,” arguing that compliance requirements should be aligned with actual domestic capacity and demand. He called for the introduction of self-certification mechanisms for foreign manufacturers, similar to global frameworks such as the EU’s CE marking.

The report situates the issue within the broader expansion of QCOs across hundreds of product categories in recent years. While the policy push is aimed at improving product quality and consumer safety, GTRI argues that regulatory rollout has outpaced the growth of testing infrastructure, creating bottlenecks and cost pressures.

There are also concerns about unintended consequences for domestic manufacturing. Many Indian producers depend on imported components, machinery, or specialized inputs not readily available at scale or quality locally. If compliance costs make such imports prohibitively expensive, it could undermine competitiveness—cutting against the stated goals of the “Make in India” initiative.

GTRI has recommended a series of corrective steps, including capping testing fees for routine industrial products, recognizing certifications from accredited foreign laboratories, and adopting risk-based testing norms to reduce excessive sample requirements. It has also called for regulatory impact assessments before new QCOs are introduced.

“Quality regulation should improve standards, not eliminate smaller businesses,” the report said, cautioning that without reform, the current regime risks evolving into a protectionist compliance barrier—one that safeguards quality on paper but narrows the marketplace in practice.

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