India’s trade barrier: Hurting itself more than others

President-elect Donald Trump has once again threatened to impose high tariffs on Indian imports to the US, continuing his long-standing battle against what he perceives as “unfair” trade practices. Trump's argument is that if India imposes 100% tariffs on American goods, the US should not charge nothing in return.

However, the real issue with India’s trade policy isn’t the tariffs. The problem lies in a seemingly harmless administrative process that is far more obstructive than tariffs. Importers in India today are more concerned about non-tariff barriers, specifically the “Quality Control Orders” (QCOs).

QCOs require that imports into India meet certain quality standards. While this sounds reasonable, in practice, QCOs have become a tool to restrict imports and reduce competition over the past two years. According to India’s commerce minister, over 700 QCOs have already been issued, with a target of 2,500. These QCOs cover a wide range of products, including shoes, toys, steel, honey, and chemicals. Officials argue that such measures are necessary to protect consumers from substandard imports, especially from China.

In reality, QCOs affect imports from all countries and are often unpredictable. Companies complain about the arbitrary addition of new items and specifications to the list. Moreover, the certifying authorities, typically the Bureau of Indian Standards, are ill-equipped to handle the flood of applications from both domestic and foreign companies, lacking the capacity to process them efficiently.

India’s reliance on QCOs as a trade policy tool is creating significant barriers, impacting not only foreign businesses but also its own economic interests.