Trade body pinpoints big loophole in India’s quality check-related rules:How a small nut can screw up the entire Make in India program?

India’s ambitious Make in India initiative is facing unexpected challenges due to strict quality control orders (QCOs) on fasteners, the nuts, bolts, screws, and other small parts that may be small in size but play a big role in factory operations across industries. Global think tank, GTRI has warned that these rules have backfired, driving up costs, reducing supply, and disrupting production across key sectors. Fasteners account for 1% of final product’s cost Fasteners might seem insignificant, often accounting for less than 1% of a product’s cost. However, their absence can bring entire assembly lines to a standstill or delay major construction projects. This makes them a critical part of the manufacturing process. One Product One Licence policy – a bane The core of the problem lies in the “one-product-one-licence” system imposed by the QCOs. This means that manufacturers need separate certifications for each variation of a fastener, based on size, strength, coating, and other factors. This actually leads to duplication, delays, and uncertainty. ₹1 lakh licence cost For small and medium-sized enterprises (MSMEs), the cost of compliance can be crippling. According to GTRI, each licence can cost between ₹80,000 to ₹1 lakh, with additional expenses for testing each variant. Setting up in-house testing facilities can add a further ₹30 lakh to ₹40 lakh. For many MSMEs, these costs far exceed their profit margins. The policy has also led to the exit of several foreign suppliers, reducing competition and allowing certified firms to charge higher prices. This has resulted in shortages, particularly of specialized or low-volume fasteners, which are crucial for various industries. According to GTRI, Shaunak Rungta, a member of the Federation of Indian MSMEs (FISME), highlighted that even basic items like drywall and chipboard screws are now hard to find in India. He noted that despite investigations finding no evidence of unfair trade practices and recommendations to remove the QCO, the policy remains in place, significantly impacting his firm’s turnover. Adding to the woes, confusion over customs codes at ports is causing further delays and increasing transaction costs. Critics argue that the QCOs are unnecessary for many applications. Sectors like railways, defence, and power already have stringent quality checks in place. They also point out that existing import duties and standards are sufficient to address substandard imports. Instead of improving quality, the policy is seen as a step back towards old-style licensing controls, hindering the flexibility and speed needed for a thriving manufacturing sector. A more effective approach would be a risk-based system focusing on critical safety items, with simpler compliance for standard products. India’s fastener trade is a two-way street. While the country exports a significant amount of standard fasteners, it also imports specialized ones. This interdependence highlights the need for free and easy trade in fasteners. Current quality check-related rules weaken India’s manufacturing competitiveness Restricting trade in these low-cost, high-utility components increases overall production costs and weakens India’s manufacturing competitiveness. Policies should ensure smooth trade flows, allowing industries to access the full range of fasteners they need for efficient production.