Government’s Shift in Strategy for Export Promotion
- The Union Government is moving away from subsidies as the primary tool to boost exports.
- Focus now is on a “carrot-and-stick” approach, emphasizing Quality Control Orders (QCOs) to push industries towards global competitiveness.
Relevance : GS 2(Governance) , GS 3(Economy ,Export)
Quality Control Orders (QCOs): The ‘Stick’
- QCOs mandate that products (domestic/export/import) must meet minimum standards as defined by the Bureau of Indian Standards (BIS).
- Intended to enhance product quality, thus improving export credibility and reducing sub-standard imports.
Rationale Behind the Policy Shift
- Government officials admit that past subsidies haven’t significantly boosted exports.
- Acknowledgement of product quality issues in Indian manufacturing.
- Focus on regulatory facilitation like land acquisition and compliance ease, instead of financial subsidies.
Subsidy Exceptions Still Being Considered
- Despite overall reluctance, subsidies for rare earth batteries are under discussion:
- Triggered by China’s export ban on these critical components.
- Highlights strategic sectors may still get selective support.
Industry Reactions and Sector Demands
- Federation of Indian Mineral Industries (FIMI) has demanded:
- Subsidy of ₹10,000–15,000 per kWh for alternate fuel HEMM in mining.
- Industries continue to seek direct support, despite policy shift.
Debate Around QCOs
- Commerce Minister Piyush Goyal: QCOs are essential for export competitiveness.
- NITI Aayog Vice-Chairman Suman Bery: Labels QCOs a “malign intervention” that could:
- Hurt MSMEs and discourage imports needed for production.
- Especially problematic for units relying on imported inputs.
Government’s Balancing Act
- Exemptions from QCOs are allowed under:
- Advance Authorisation Scheme
- Export Oriented Units (EOUs)
- Special Economic Zones (SEZs)
- Objective: To not obstruct export-linked production that depends on imported inputs.
Policy Implications
- Indicates a strategic industrial push — India wants to compete globally on quality, not on subsidies.
- Reflects WTO-compliant policy orientation, reducing subsidy-related trade disputes.
- Potential compliance burden for MSMEs and informal sector players.
- Aligns with Atmanirbhar Bharat and Make in India, but needs institutional and quality infrastructure support.
