Its best to park a suitable scheme in The MSME Ministry that can support lab development across sectors
The PMUs in different states will also be looking at establishing processes to help MSMEs adopt digital platforms including PSBLoansIn59Minutes, listing on stock exchanges, GeM portal, etc.
By Anil Jauhri
As India gears up to adopt the PM’s call for conforming with global standards, it has to tackle another challenge that has often impeded its quest for accessing the world markets. A key component of the infrastructure needed to demonstrate compliance with standards is testing labs.
Even though testing is an integral component of product compliance—be it regulatory or voluntary—India regularly faces the spectre of either absent or insufficient lab infrastructure.
In the early 2000s, when the EU rejected seafood due to antibiotic residues, we did not have a single lab for this kind of testing since such tests were not a requirement for certifying exports. The government stepped in to equip half a dozen labs with necessary facilities. The same issue was faced recently in PPEs and ventilators—in the absence of regulation and domestic manufacturing for these items, we did not have labs to test as per the specifications laid down by the ministry of health and, thus, struggled for a while till labs came up.
We should also recognise that absence or insufficiency of lab infrastructure hurts MSMEs more since large scale industry can afford to either send samples abroad or set up their testing facilities. It was glaringly visible recently in the case of ventilators and N95 masks, where independent labs were not available. At the same time, some manufacturers had their own labs, and BIS had to resort to testing samples of MSMEs in other manufacturers’ labs, which is certainly not a happy solution.
This calls for a cohesive policy to incentivise the creation of lab infrastructure in the country in anticipation of demand, mainly from the private sector. Further, it calls for financial assistance not only to the government but also the private labs to equip and upgrade themselves.
Ideally, it should be considered a good manufacturing practice for industry to have inhouse labs, at least for the essential routine testing if not complete testing. Indeed, the BIS, in its voluntary certification scheme for the popular ISI mark, has since the early 1950s prescribed availability of inhouse labs as a prerequisite and made excellent contribution to fostering a quality culture in the industry, including MSMEs.
The problem arises when the same voluntary certification is imposed or notified as mandatory by the government, usually under regulations oddly called Quality Control Orders or QCOs; there is no such expression in the BIS Act, which affects all MSMEs, unlike the voluntary scheme.
This is a challenge for MSMEs, more so for micro and tiny sectors, since creating an inhouse lab and its maintenance, personnel, equipment, consumables and all, requires investment.
Therefore, there needs to be a thought given to whether insisting on inhouse labs under regulations is necessarily the best practice for India or if it should be replaced by a model of using external labs or even better labs in industry clusters. The ministries that are notifying regulations under the BIS Act and prescribing BIS certification need to be cognizant of this aspect when finalising the regulations rather than getting caught in industry representations after the regulation’s notification.
Further, it has to be considered if the government should incentivise MSMEs to set up inhouse labs or come together to develop common testing facilities, especially in industry clusters, as part of the lab infrastructure.
A good example is how food lab infrastructure to global standards has been built with the assistance schemes from the ministry of food processing industries and APEDA. However, since the need arises across sectors, its best to park a suitable scheme in a ministry that can support lab development across sectors, say the ministry of MSME. Since the absence of labs hurts MSMEs the most, including assistance to MSMEs to develop in-house labs or industry bodies to develop common testing facilities for their members can be a prudent solution. Recently, the Haryana government announced its industrial policy in which there is a provision for the support of lab equipment.
While creating lab infrastructure, it would be good to keep in view the growing international practice of conformity assessment—testing, inspection and certification—being increasingly left to the private sector, and a realisation that public lab infrastructure has not been well-maintained, showing the government is not good at managing labs. As far back as 2006, the working group on quality set up by the Planning Commission, under eminent scientist RA Mashelkar, then secretary, DSIR, had recommended caution in funding labs in the government and suggested exploring PPP model for labs. It would be interesting to learn from the experience of FSSAI, which has gone for the PPP model for its lab in Ghaziabad and limit funding of labs in government to niche areas or where labs are not financially viable and private sector would not step in.
One of the surest ways of attracting investment in labs is regulatory certainty—we have ready examples of how labs came up in electronics and IT sector when MEITY came up with regulations or how toy testing labs multiplied when DGFT made testing in NABL accredited lab a requirement for imports. The demand for the export market, as seen in the growth of food labs, is another factor which drives the creation of lab infrastructure.
It goes without saying that all the policy measures and support should stipulate that labs get accredited by NABL as per ISO 17025 so that their acceptance overseas is facilitated.
Therefore a combination of judiciously crafted regulations, stimulus for market demand for testing and financial assistance for creation of labs, including among MSMEs, is needed to create a world-class lab infrastructure in the country to underpin the initiatives like Make in India and Atmanirbhar Bharat.