The QCO restricts the import and sale of materials that do not carry a Bureau of Indian Standards (BIS) mark.
The Confederation of Indian Textile Industry (CITI) highlighted in its pre-Budget memorandum to the Finance Ministry that the Quality Control Order (QCO) on key input materials for the domestic textile industry is harming jobs. It noted that the QCO is reducing the competitiveness of the downstream industry and hindering access to raw materials.
The QCO restricts the import and sale of materials that do not carry a Bureau of Indian Standards (BIS) mark. However, the industry pointed out that the BIS certification process is particularly challenging for micro, small, and medium enterprises (MSMEs), and it is contributing to the creation of monopolies due to the stronger lobbying power of larger businesses.
CITI explained that while countries like Bangladesh and Vietnam have free access to such raw materials, India has imposed the QCO on man-made fibre (MMF) fibre and yarn, which is functioning as a non-tariff barrier (NTB) to the import of these materials. As a result, there is a shortage of specialized fibre and yarn varieties, which has driven up domestic prices. It was further pointed out that Indian raw material prices are significantly higher than international ones.
The industry association emphasized that expensive raw materials are negatively impacting the cost competitiveness of downstream textile products. Since the downstream segment has the highest employment elasticity in the entire value chain, this is jeopardizing the livelihoods of millions employed in the sector.
CITI stressed the need for ensuring the ample availability of all raw materials at globally competitive prices. To address this, the association recommended that the government liberalize import policies and lower the basic customs duty (BCD) on all MMF fibres, filaments, and essential chemicals like PTA and MEG, which are crucial for the production of these raw materials.
The association also noted that the Indian cotton industry is importing specialized varieties of cotton, such as contamination-free, organic cotton, and sustainable cotton, which are not available domestically. These varieties are imported by designated businesses to meet the quality demands of foreign clients.
CITI pointed out that in India, cotton is mostly grown by small and marginal farmers who sell their cotton during the peak season. Due to working capital constraints, the industry can only maintain limited inventory and relies on traders for cotton supply during the off-season. These traders often price cotton based on import price parity, which makes domestic cotton more expensive than international cotton.
It was noted that throughout the year, Indian cotton fibre prices were 15–20 percent higher than international cotton prices, which impacted the cost competitiveness of downstream value-added cotton-based textile products.