India's DPIIT has launched the 'Transition Facilitation (Quality Control) Order, 2026' on June 25 to streamline BIS certification. While the government aims to ease compliance, the Global Trade Research Initiative (GTRI) warns the new 'QCO Plus' system could create administrative bottlenecks. The committee-based evaluation process raises concerns about discretionary hurdles and restricted access for foreign firms, which now require an Indian registered entity to participate.
What Happened
On June 25, 2026, the Department for Promotion of Industry and Internal Trade (DPIIT) notified the 'Transition Facilitation (Quality Control) Order, 2026.' This new framework introduces an alternative, risk-based compliance pathway for products covered under various Quality Control Orders (QCOs), such as toys, air conditioners, footwear, and household electrical appliances. The order aims to address widespread industry feedback regarding delays in obtaining mandatory Bureau of Indian Standards (BIS) certification, which involves traditional factory inspections under the 'Scheme I' (ISI Mark) framework.
The 'QCO Plus' Concern
While the government intends to simplify procurement and supply chain flexibility by allowing companies to operate under 'Scheme II'—a self-declaration based registration system—the Global Trade Research Initiative (GTRI) has flagged potential risks. GTRI founder Ajay Srivastava described the new framework as a 'QCO Plus' system. The primary concern is that the new Implementation Committee, chaired by DPIIT and comprising various government departments, will evaluate applications based on factors beyond just technical conformity. These include 'localization' commitments, supply chain development, and broader industrial policy considerations. Critics argue that this transition from a standard technical test to a discretionary committee assessment could replace old delays with new administrative or bureaucratic hurdles.
Hurdles for Foreign Manufacturers
A significant point of contention is the eligibility criteria for the new pathway. According to the order, only companies incorporated under India’s Companies Act, 2013, are eligible to apply. This effectively limits the benefits for foreign manufacturers who do not have an established, registered Indian representative firm. For international suppliers, this may mean the traditional, often more expensive and time-consuming BIS certification route remains the primary option, potentially creating an uneven playing field compared to local competitors who can utilize the new, streamlined pathway.
Sector and Market Impact
The order currently covers 10 notified QCOs. Sectors like toys, air conditioners, compressors, footwear, and electrical appliances are expected to see the most immediate impact. Large domestic manufacturers that have demonstrated consistent, default-free compliance over three years are particularly well-positioned to benefit from this flexible sourcing regime. Conversely, smaller importers and foreign manufacturers with limited operations in India may find the lack of clarity on processing timelines and documentation requirements a cause for concern.
What Investors Should Track
The long-term success of this regulatory reform will depend on the transparency of the Implementation Committee. Investors should monitor whether the DPIIT issues clear, detailed operational guidelines that specify application processing timelines, rejection reasons, and documentation requirements. The establishment of a digital, transparent application system—as suggested by industry advocates—will be a key monitorable to ensure the 'Transition Facilitation' order acts as a deregulatory measure rather than a new layer of oversight.