Japanese firms raise concerns over India's BIS certification rules, GTRI report urges overhaul

Japanese companies’ growing concerns over India’s mandatory Bureau of Indian Standards (BIS) certification regime underline the need for a broader overhaul of the country’s Quality Control Order (QCO) framework, the Global Trade Research Initiative (GTRI) said in a report.

The think tank, led by Ajay Srivastava, welcomed Commerce and Industry Minister Piyush Goyal’s recent proposal to ease or waive mandatory quality certification requirements for high-technology industries, but said a sector-specific exemption would not address wider problems with the certification system.

Goyal, speaking in Tokyo on August 25, said India would develop a framework to ease or waive mandatory quality certification for high-tech industries. The move followed concerns raised by Japanese companies over the compliance burden associated with India’s QCO regime.

According to GTRI, the issue is significant for foreign manufacturers looking to operate or invest in India. A Japan External Trade Organization (JETRO) survey for fiscal 2025 found that 71.9% of Japanese manufacturers in India said BIS certification had affected, or was expected to affect, their operations.

The proportion was even higher among companies in sectors closely linked to India’s manufacturing ambitions. As many as 92.3% of general-machinery manufacturers and 76.8% of transportation-equipment manufacturers reported an impact.

Most of the affected companies described the impact as serious or very serious, GTRI said.

According to Srivastava’s report, lengthy approval processes and cumbersome procedures were among the biggest concerns raised by Japanese companies. Nearly three-quarters of respondents cited delays or complex requirements, while others said they struggled to establish whether their products required certification or faced high compliance costs.

The BIS process can involve product testing, extensive documentation and inspections of overseas factories by Indian officials. Foreign manufacturers are also required to bear these costs, even when their products already comply with Japanese or internationally recognised standards, the report said.

The certification requirements have also had knock-on effects on supply chains.

Some Japanese companies have changed suppliers because overseas manufacturers were unwilling to undertake India-specific certification for relatively small orders. Others were unable to identify Indian suppliers capable of meeting their technical specifications.

The JETRO survey found that 42.7% of affected businesses had faced suspended sales or delayed deliveries. Companies also reported difficulties obtaining No Objection Certificates for imports that had previously been cleared without full certification.

GTRI said the compliance burden could be particularly damaging for smaller Indian businesses.

“Announcing relief for Hi tech sector cannot substitute for wider reform of an unsuitable certification model,” the report said.

The think tank questioned whether it made sense to exempt high-tech machinery from stringent certification requirements while extending QCOs to products such as footwear and furniture, where it argued that the safety rationale was relatively weak and compliance costs could fall disproportionately on MSMEs.

GTRI cited the case of a Vietnamese screw manufacturer to illustrate the potential cost of the current system.

According to the report, the company spent about ₹20 lakh on testing at a BIS-nominated laboratory and another ₹40 lakh on consultancy, inspection and related expenses. Despite completing the process, it had not received a final BIS decision.

Srivastava argued that such open-ended procedures risk turning a quality-assurance mechanism into what effectively becomes a costly licensing regime.

The report called for India to move towards a risk-based regulatory framework, drawing on the European model.

In the European Union, standards are prescribed for many products while manufacturers can declare conformity and use the CE mark without obtaining prior government registration in every case. Regulators instead rely heavily on market surveillance and penalties for non-compliance.

GTRI said India could adopt a similar approach by reserving mandatory prior testing, registration and factory inspections for products posing genuine risks to health, safety, national security or the environment.

For lower-risk products, manufacturers could instead be allowed to declare conformity, with regulators relying on market checks and penalties when standards are violated.

The think tank also called for an end to what it described as double certification, particularly in sectors such as steel where QCO requirements can apply separately to inputs as well as finished products.

The requirement has been suspended until September 2026 following pressure from downstream industry associations and media attention, according to the report. GTRI said the relaxation should instead be made permanent.

It also called for permanent exemptions for machinery and specialised industrial inputs.

The report flagged another issue with the government’s treatment of products that fall outside the QCO framework.

Following recommendations of the Gauba Committee, the Steel Ministry ended the requirement for No Objection Certificates for products not covered by QCOs. However, according to GTRI, this was replaced by a separate list of products treated as exempt.

The problem, the report said, is that several products outside the scope of QCOs are not included on the exemption list. Importers are consequently required to seek additional clearances, increasing costs and causing delays.

GTRI said products that are not covered by a QCO should instead be cleared automatically, without requiring their inclusion on a separate exemption list.

The think tank also questioned the rationale for applying mandatory certification to everyday products such as footwear and furniture.

“Mandatory certification raises costs, hurts MSMEs and makes goods more expensive,” GTRI said, arguing that for such products, consumer choice and competition are better suited to determining quality, design and comfort.

The report warned that India’s approach could also have consequences for its exporters if other countries adopt similar requirements.

Indian companies could face demands for separate country-specific certifications even when their products already meet recognised international standards. This could expose exporters to additional testing, licensing and renewal fees, as well as travel and accommodation costs for overseas inspections.

Such requirements could increase export costs, delay shipments and create new barriers to trade, GTRI said.

The think tank called for a top-level review of the QCO framework to ensure that quality regulations protect consumers without becoming de facto import restrictions or licensing barriers.

Without wider reform, Srivastava said, the current system could weaken MSMEs, push up prices and discourage the very manufacturing investment that India’s Make in India strategy is seeking to attract.