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India's export quality control system.

If a supplier loses export

business, because of nonconformance to the buyer's quality requirements, this affects not only that company's future export prospects in the foreign market but also the image of the exporting country. One way to avoid this situation is to adopt effective export quality control measures at the national level that minimize the possibility of nonconformance. Many developing countries have taken such steps to help stimulate the growth of their export trade. One of these is India, which enacted a comprehensive law in 1963 to ensure an appropriate level of quality for exports. Since then India has developed infrastructure to provide third-party certification for selected export products, with successful results. The extent of the system that has been put into place is illustrated by the fact that in 1988-89, for example, nearly 185,000 consignments of Indian goods were certified for export. It is estimated that about 40% of India's total exports (by value) are subject to pre-shipment inspection under the system.


In the early 'sixties considerable stress was being laid in India on increasing exports of both traditional and new products. As a means to promote this export expansion, the Government appointed a committee to review, among various subjects, the existing schemes, rules, regulations and legislation relating to compulsory and voluntary quality control and pre-shipment inspection of export products and their packaging and to suggest action to ensure appropriate quality of export goods. Among other measures, the Committee advised that a central scheme for quality control and pre-shipment inspection be created, which could coordinate the arrangements currently in operation and be extended to cover additional products as necessary. It also suggested introducing various administrative and legislative measures to improve the quality of exports. Based on the Committee's recommendations, the Indian Parliament passed comprehensive legislation entitled Export (Quality Control and Inspection) Act in 1963. That Act is the principal legislation in India giving powers to the Government to frame policies and programmes for effective export quality control.

Organizational aspects

The export inspection system set up under this legislation operates through an organizational structure comprising the Ministry of Commerce (the regulatory body), the Export Inspection Council (an advisory body) and the Export Inspection Agencies (the implementation agencies), as explained below.

Ministry of Commerce: The Ministry of Commerce carries out the following main functions upon the advice of the Export Inspection Council:

* Frames policies and issues orders, rules and regulations concerning the quality control of export products.

* Recognizes inspection agencies, samplers, surveyors and testing houses.

* Constitutes appeals panels concerning decisions of the Export Inspection Agencies.

* Provides financial grants to the Export Inspection Council and these agencies.

More specifically, the Ministry decides which products should be subject to quality control and/or inspection and prescribes the inspection methods and standard specification(s) to be applied to them. It also has authority to prohibit the export of certain products, after consulting the Export Inspection Council. Furthermore it can recognize or establish "marks" to show conformity of products with standard specifications.

Export Inspection Council: The Export Inspection Council (EIC), consisting of 20 members, is constituted by the Ministry and acts as advisory body to it. Standardization and quality control experts, government officials, export promotion councils, private inspection agencies and trade associations, among other bodies, are represented on the EIC. Its principal functions are to:

* Advise the Ministry on measures to be taken to enforce quality control and the inspection of exports, and draw up programmes for this purpose.

* Exercise technical and administrative control over the Export Inspection Agencies established by the Ministry.

The EIC has two standing committees, the Administrative Committee and the Technical Committee. It also establishes other specialized committees from time to time. The EIC meets four times a year.

Export inspection agencies: Five Export Inspection Agencies (EIAs) established in 1966 by the Ministry carry out a large part of the export certification work. They are located in the principal cities, with branches in major ports and industrial centres. The main functions of these agencies are to:

* Certify export products through pre-shipment inspection or surveillance over quality control exercised by manufacturers.

* Implement quality control and inspection policies drawn up by the Ministry.

The EIAs employ over 2,000 technical staff, laboratory technicians and other support personnel. The inspection officers appointed have different specializations, such as in engineering, chemistry, food and agriculture, jute and jute products, and footwear.

On initial appointment, all officers receive training in the Quality Development Centre that has been created in one of the EIAs. During their period of service EIA employees are regularly given orientation and refresher courses. Specialized institutions within India and abroad are also used to train EIA officers.

Testing laboratories have been set up in each EIA, and these are manned by staff specialized in laboratory testing. Services of other governmental and private laboratories are also used by the agencies.

The work undertaken by these agencies is extensive. For example, the number of samples analyzed by the EIAs during 1988-89 was: chemical and allied products, 2,411 samples tested; engineering products, 16,056; frozen marine products, 77,836; dried marine products, 845; basmati rice, 710; cashew kernels, 1,308; jute and jute products, 3,880; and others, 8,581, giving a total of over 111,600 items analyzed.

Financing: The main source of financing of the EIAs is the inspection fee that they collect from exporters. The Ministry sets this fee when issuing notification for coverage of an item under the quality control scheme. The fee varies from 0.1% to 0.4% of the FOB value of the product. If the income from inspection fees is insufficient to meet the operating costs of the EIAs, the Ministry provides funding to them through the Export Inspection Council.

In 1988-89, for example, the agencies collected fees totalling Rs. 106 million (nearly $5 million).

Other inspection agencies:

In addition to the EIAs, other governmental, parastatal and private inspection agencies have been authorized by the Ministry to carry out pre-shipment inspection. A scheme has been set up for accrediting inspection agencies, samplers, surveyors and testing laboratories for this purpose. Based on the recommendations of a team of experts, the Ministry recognizes the agencies as inspection bodies for a specified period, which is renewable upon reassessment of the agency's performance.

The following agencies are presently engaged in pre-shipment inspection: the Directorate of Marketing and Inspection, under the Agricultural Marketing Adviser to the Government, for agricultural commodities, livestock and horticultural products; the Directorate of Fruits and Vegetable Preservations (a Government agency), for processed fruits and vegetable products; the Salt Commissioner to the Government, for common salt; the Bureau of Indian Standards, for industrial products; and 21 private inspection agencies, for selected chemical and allied products, minerals and ores, and engineering products. For textile items, such as mill-made cotton yarn, cotton cloth and handloom fabrics, pre-shipment inspection is carried out by the Textile Committee (a Government agency). (Statutory rules and regulations concerning quality control of textile items are issued by the Government in separate legislation.)

Selection of products

A considerable number of types of export products have been designated by the Ministry for compulsory inspection before shipment. The EIC and its Technical Committee take the following factors into account among others before including a product on the list:

* Volume and trend of exports of the product and the scope for expanding these exports.

* Extent of foreign competition in that product line.

* Need for enforcing quality control and/or inspection to increase exports of the product.

The Ministry carefully screens the items to be included under the inspection scheme and also consults the trade and industry. In several cases the Ministry's proposal to introduce inspection for a given product has not been supported by the trade, and, after considering the views of the EIC and the trade, the Ministry has decided not to add it.

From 1964 to 1984 the number of products on the list for compulsory inspection gradually increased. After 1985, however, few items were added. The main categories of products that have been brought under pre-shipment inspection are food and agricultural products, chemicals and allied items, engineering goods, coir and coir products, and footwear. (Products for which quality control is already carried out in another manner, either directly or indirectly by manufacturers and exporters or through other legislation, have not been brought under this system.)

Export standards

Standards and specifications have been prescribed for all of the export products on the list. The main considerations in selecting the standards are that they meet buyers' requirements and comply with technical regulations of the importing countries. Technical specifications and requirements prescribed by the buyers in their export orders are generally used as the basis of inspection.

Because of the diverse nature of products inspected and exported from India, and the large number of countries to which these goods are shipped, a broad range of standard specifications has been recognized for this work:

1. International standards, for instance those issued by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC), and the Codex Alimentarius of the World Health Organization (WHO) and the UN Food and Agriculture Organization (FAO).

2. National standards issued by the Bureau of Indian Standards or a national standards body in the foreign market.

3. Standards adopted by foreign associations or similar bodies, for instance the American Society for Testing and Materials (ASTM).

4. Specifications or technical regulations laid down by a ministry, government department, regulatory body or public utility board of the importing country, such as the U.S. Food and Drug Administration or U.S. Department of Agriculture.

5. Specifications agreed upon between the buyer and the seller at the time of entering into the sales contract, which could be in the form of a drawing, catalogue, company standard or other written requirement. Such specifications could form the basis of inspection if they fulfill one of the following conditions: they are examined and accepted by the EIC's standing panel of experts, or they meet the requirements laid down in the minimum export specifications prescribed for the purpose (if no such specifications have been set down, the specifications agreed to by the buyer and the seller prevail).

6. Sample(s) provided by the foreign buyer or offered by the exporter and accepted by the buyer (for instance in the case of footwear and components, and some industrial products not involving safety and health hazards).

For all industrial products that could present safety or health risks, exports are generally permitted only if they comply with agreed national standards. Concerning food items, in addition to export standards the laws of the importing country must be adhered to. For all export products tests are prescribed to ensure that packages withstand transit hazards.

Methods of inspection

In India export production takes place not only in large or medium-size enterprises but also in small, cottage industries. The concept of "end-product inspection," carried out by an independent inspection agency, is used for exports of small firms, and the method is termed "consignment-wise inspection." For larger companies that undertake in-house quality control at various stages of processing, the certification system used is called "in-process quality control." As a refinement of in-process quality control, a scheme of self-certification was established in 1981. These three methods of inspection are discussed below.

Consignment-wise inspection: This system is used only by companies that are not in a position to qualify under the in-process quality control system or the self-certification system. Exporters present their consignments intended for shipment to inspectors of the Export Inspection Agency or the private inspection agency, who carry out sampling and testing. If the results are satisfactory, a certificate declaring the consignment fit for export is issued. All of the packages in the consignment are "sealed" so that goods cannot be tampered with.

If the goods do not conform to the requirements, the agency rejects the shipment. The exporter then has the option of making the improvements required and re-presenting the goods for inspection or appealing the case. The appeals panel is set up by the Ministry, with two-thirds of the members nominated from trade and the remainder from other governmental or parastatal organizations.

The total time required for certification under this system varies from one to ten days depending on the product and tests applicable to it.

In-process quality control:

This technique lays emphasis on the responsibility of the manufacturer or processor for ensuring consistent quality in production. An Export Inspection Agency makes a preliminary assessment of the quality control system in the manufacturer's establishment, and a panel of experts makes a further evaluation of it. If the panel is satisfied with the controls being exercised by the company, the Export Inspection Agency grants a certificate of inspection to the company. Periodic audit checks are, however, carried out by the Export Inspection Agency. The frequency of these checks depends on the export performance of the company, including any complaints received from foreign buyers, among other factors. The approvals issued under this scheme are renewable, following a reassessment.

Certification by an export inspection agency under this system is generally completed within two days.


Manufacturers that meet specified norms are eligible for approval under the self-certification scheme, following an assessment by an Export Inspection Agency and then a panel of experts constituted by the EIC. Such companies are recognized by the Ministry as inspection agencies of their own products for a three-year period and are allowed to issue the certificate of inspection for their export consignments. Audit checks are, however, carried out, and the panel of experts reassesses the situation at the time of renewal.

Certification mark

The Bureau of Indian Standards (BIS) awards a certification mark to products that conform to Indian Standard Specifications and are manufactured under a prescribed quality-control scheme. An assessment and periodic audit of the manufacturing process and the quality control levels exercised therein are undertaken by BIS officials. For some export products the presence of a BIS certification mark signifies that they are fit for export, and no further inspection and certification by an Export Inspection Agency is necessary.


Exporters submitting goods for pre-shipment inspection are required to make an application to an export inspection agency on the prescribed form and to pay the inspection fee in advance. A copy of the foreign buyer's order must also be shown to ensure compliance with the technical requirements, if any, in the buyer's order. After inspection and verification, the agency issues a certificate of inspection, which the exporter must present to the customs authorities at the point of shipment.


Pre-shipment inspection of export goods is generally conducted at the place of their manufacture or in the exporter's warehouse. The goods are then transported to the port or airport for shipment. Some perishable food products are carried from cold storage to theport by refrigerated or insulated vehicles. To ensure that such items have not deteriorated during transit, the Export Inspection Agencies also undertake random checks of the certified export consignments at the port of shipment.

Separate technical units in the inspection agencies carry out random audits on their own, such as while the regular inspection is in progress, and during transit of the goods.

The senior officers of the Export Inspection Council and the agencies have in addition been authorized to audit inspections carried out by private inspection agencies and under the self-certification scheme. Sanctions or penalties resulting from such audit exercises are imposed through either departmental adjudication or the courts.

During 1988-89 for example, senior officers of the inspection agencies and officers of technical audit units carried out 6,478 audit visits.

Technical services

In addition to the regulatory function of pre-shipment inspection, the Export Inspection Agencies provide technical advice to the trade and industry to improve further the quality of export products.

Technical advisory service: The agencies provide technical assistance to small manufacturers in particular on how to improve the quality of exports and establish a system of in-process quality control.

Information service: Through the Quality Development Centre the inspection agencies bring out publications giving information on the rules and regulations and the testing methods issued by the Ministry and the Export Inspection Council for different export items. A quarterly periodical of the inspection agencies, Export Inspection Journal, disseminates information to the industry on technological developments in quality control.

Product development: The Pilot Test House of the Export Inspection Agencies assesses the quality of prototypes developed by manufacturers, conducts research and development on export products in cooperation with industry and allows the trade to use the testing facilities for a small charge.

Training and seminars: The inspection agencies conduct training programmes for middle-level managers, quality control inspectors, supervisors, processing technologists and production staff. Opportunities are also given to industry personnel for on-the-job training in the laboratories of the inspection agencies.

Calibration service: The laboratories of the inspection agencies provide a routine calibration service to the industry for certain types of instruments and electrical meters.

Voluntary inspection: The Export Inspection Agencies also offer their inspection services to exporters of all products not covered by compulsory inspection. Such requests for inspection come from either exporters themselves, foreign buyers or authorities in the importing country.

Implementation of food laws

The inspection agencies ensure that food laws of the importing countries are followed by Indian exporters. The Export Inspection Council and the inspection agencies maintain regular contact with the concerned foreign authorities. Adjustments are made in Indian standards, sampling methods, testing techniques, labelling and so on to harmonize them with those of import markets. For example, the scale of sampling and the testing procedure for Indian cooked shrimps were harmonized with that of Australia, which resulted in the acceptance of cooked shrimps by Australian authorities without further checks on these imports.

Overcoming problems

During the course of establishing and operating these pre-shipment inspection schemes various problems have been encountered.

For instance, the trade and industry has sometimes opposed proposals to introduce compulsory inspection on certain export products. Among their main arguments have been that the proposed export standards were too high, compulsory inspection might hamper their shipment schedules and the inspection fee would affect their export pricing. The Ministry of Commerce, in consultation with the Export Inspection Council, has examined these points, and the final decision has been taken by the Ministry with the aim of protecting the country's export image.

Exporters have sometimes complained of delays in pre-shipment certification. These delays could in some cases be attributed to such factors as a lack of adequate inspection personnel or testing facilities. These complaints have been examined carefully, and corrective actions have been taken.


The export inspection system in India has undergone constant review and evaluation by different committees of experts appointed by the Export Inspection Council and the Ministry of Commerce, and many of their recommendations have been implemented. The Council's standing committees, i.e. the Technical Committee and the Administrative Committee, which meet every three months, also review inspection systems and organizational and administrative aspects, and they likewise suggest action for improving the quality of export inspection. The Technical Committee furthermore has periodic consultations with the trade and industry to obtain their feedback.

Among the improvements in the country's export inspection system that have been carried out as a result are the following:

- All exports for project works and of goods for display in exhibitions are exempt from inspection.

- A less stringent consignment-wise inspection arrangement was designed for exporters with a good record in quality control but not in a position to implement full in-process quality control.

- Manufacturers approved under the in-process quality control system with a good record can issue certificates of inspection themselves.

- A scheme with a reduced scale of sampling was instituted for exporters with a low rate of rejection of their export consignments.

- More private inspection agencies, surveyors and testing institutions are being recognized as an alternate source of inspection.


From 1960 to 1990 India's export earnings increased considerably, including those from both traditional exports and industrial products. It is difficult to measure the direct contribution of the export quality control scheme to this export increase, but it is clear that the steps taken by the Government in this regard had a positive impact on the small-scale sector in particular, which accounts for a large proportion of the India's exports. Export quality control activities have generated an overall sense of commitment to quality both through the system's regulatory measures and promotional activities.

For example, exports of marine products from India have increased rapidly over the past several decades. The quality of marine products has been continuously monitored through compulsory quality control introduced by the Government in 1965, which has stimulated firms to make improvements in their processing plants. The result has been better product quality, which has enabled suppliers to get higher export prices.

Some importing countries (for example the United States, Australia, Belgium, Netherlands and Luxembourg) have accredited the inspections of India's Export Inspection Agencies, and products certified by these agencies are now subject to fewer checks by the importing countries' authorities.

Complaints on quality from foreign buyers are a negligible figure. No serious quality disputes involving foreign buyers have occurred in the recent past.


Countries considering introducing compulsory quality inspection for exports or improving their existing systems could benefit from the following suggestions, based on India's experience.

- The export of articles intended for human consumption or application, as well as those affecting health, safety and the environment, should be authorized only if the goods conform to quality standards.

- Procedures should be clearly defined and issued in writing, with special attention given to avoiding delays in shipments.

- The existing government and private inspection agencies should not only be encouraged to develop and enlarge their sphere of activities to include export pre-shipment inspection work on products that are critical to the national economy and highly sensitive to the quality factor, but should also be assisted by the government in the training of personnel, procurement of testing equipment and creation of other infrastructure for pre-shipment inspection work.

- The process of accrediting surveyors, samplers, inspection agencies and testing laboratories for pre-shipment inspection work should be introduced through a competent organization that can also review the performance of such bodies periodically.

- If export goods carry the certification mark of the national standards body and if that mark is acceptable to the foreign buyer, no further export inspection should be introduced for such products.

- Manufacturers with well established quality control arrangements should be allowed to certify their own products. A scheme of accreditation of such manufacturers, including provision for periodic assessment, should be introduced.

- For the benefit of the small-scale sector, common testing facilities for major export products should be established to supplement in-house quality control.

- An information centre containing relevant international standards; standards and technical regulations of the importing countries; and material on quality control and testing in general should be set up.

Subhash C. Arora was Joint Director of India's Export Inspection Council, where he worked for 15 years. He is currently an ITC quality control adviser with a sub-regional project in Africa. Enrique Sierra is ITC's headquarters-based adviser on export quality control. This article is based on a case study published in a special edition of ITC's bulletin "Export Quality Control."
COPYRIGHT 1991 International Trade Centre UNCTAD/GATT
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Author:Arora, S.C.; Sierra, Enrique
Publication:International Trade Forum
Date:Oct 1, 1991
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