Q. To what extent have India’s Quality Control Orders (QCOs) fostered genuine domestic self-reliance in manufacturing? Critically examine with reference to the toy industry. (15 Marks, 250 Words)

Core Demand of the Question

  • Extent to which India’s Quality Control Orders (QCOs) fostered domestic self-reliance in manufacturing with reference to the toy industry.
  • Challenges and limitations of  India’s Quality Control Orders (QCOs) in fostering  domestic self-reliance in manufacturing.
  • Suitable way forward

Answer

India’s manufacturing sector has long struggled with low competitiveness and structural inefficiencies. To address this, the government has increasingly turned to non-tariff measures like Quality Control Orders (QCOs) to reduce low-quality imports and promote domestic self-reliance, particularly in sectors like the toy industry.

Quality Control Orders (QCOs) Fostered Domestic Self-Reliance in Manufacturing

  • Import Reduction: QCOs sharply reduced low-quality toy imports, creating a market opportunity for domestic producers.
    Eg: Toy imports declined by nearly 90% between 2020 and 2023.
  • Increased Tariffs: Higher tariffs alongside QCOs made imported toys costlier, supporting local alternatives.
    Eg: Tariffs increased from 20% in 2019 to 70% in 2024 on toy imports.
  • Market Formalization: QCOs encouraged informal toy makers to formalize operations to comply with quality norms, strengthening the organised sector.
    Eg: As of March 2023, 1,097 BIS licenses were granted to toy manufacturing units, with 97% licenses issued to micro, small, and medium enterprises (MSMEs)
  • Innovation Incentives: Stricter quality norms pushed manufacturers to innovate product designs and materials to meet standards.
    Eg: Indian firms developed new eco-friendly and safe toy materials responding to QCO requirements.
  • Enhanced Consumer Safety: QCOs ensured only BIS-certified toys enter the market, improving product standards.
    While QCOs have triggered formalisation and quality improvement, several structural and operational challenges continue to limit their impact.

Challenges and Limitations of QCOs in Fostering Domestic Self-Reliance

  • Component Imports Rising: Shift to importing toy components instead of finished goods undermines true manufacturing self-reliance.
    Eg: Component imports surged, with electronic toy parts largely imported for assembly.
  • High Compliance Costs: Domestic manufacturers, especially MSMEs, face high compliance costs for BIS certification, limiting their growth.
    Eg: BIS certification renewal costs ₹50,000 to ₹1 lakh, burdening small firms.
  • Protectionism Masks Inefficiencies: QCOs acted as protectionist measures, masking domestic inefficiencies rather than addressing them.
  • Import Diversion: Import diversion to countries like Vietnam increased sharply, showing limited impact on overall import dependency.
    Eg: Toy imports from Vietnam rose by 1300% post-QCO implementation.
  • Supply-Demand Imbalance: Supply lagged demand, causing price rises and limiting access for India’s large young population.
    Eg: Consumer Price Index for toys increased by 21 points in 2022-23.

Way Forward

  • Capacity Building: Focus on building domestic manufacturing capacity and technological capabilities rather than import bans.
    Eg: Launch a dedicated PLI scheme for toy manufacturing to boost investments, improve global-quality standards, and cut import dependency.
  • R&D Investment: Increase investment in R&D to enhance product quality and innovation in the toy sector.
    Eg: Government schemes like the Technology Upgradation Fund Scheme (TUFS) can support innovation.
  • Scaling and Quality: Incentivize manufacturers to scale up while meeting global standards to compete internationally.
  • Global Value Chain Integration: Integrate Indian toy manufacturing into global value chains to improve competitiveness.
    Eg: Funskool India exports to over 30 countries, including the US and Europe .
  • Structural Reforms: Address structural issues such as logistics, distribution inefficiencies, and skill gaps.
    Eg: PM Gati Shakti is improving multimodal logistics hubs in states like Gujarat and Tamil Nadu to support toy clusters.

India’s Quality Control Orders (QCOs) have reinforced the Vocal for Local initiative by promoting domestic toy manufacturing and improving product standards. With the right reforms, Indian manufacturers can expand their reach, proving that Local can go Global in the international toy industry.

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Quick Revise Now !
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध

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