Standards, not barriers

The move is significant because it suggests that a regulatory framework strengthened to encourage domestic manufacturing and reduce import dependence may itself be getting in the way of the next phase of Make in India. The government’s instinct to use standards as a tool to strengthen local industry was understandable, particularly after 2020, but its application needs to evolve with the manufacturing ambitions. In the years after the border tensions with China, India increasingly tightened quality and certification requirements across a range of products, aimed at reducing import dependence.

The objective was not merely to ensure product quality and safety, but also to create greater space for Indian manufacturers to compete with imported products. For several domestic companies, particularly those competing with large global suppliers for government and private-sector orders, tighter certification requirements could improve their competitive position. A foreign supplier had to meet Indian standards and navigate the certification process before accessing the market, while domestic manufacturers that had already built the required capabilities could benefit. Such measures were also consistent with the broader push to build local supply chains and make India less dependent on imports from China.

The problem is that a policy designed to protect or nurture domestic manufacturing can become counterproductive when the product being regulated is not the end product competing with a domestic manufacturer, but a specialised machine, component, or piece of equipment required to establish a factory in India. This distinction is becoming increasingly important as India seeks to move beyond assembly into semiconductors, advanced electronics, precision manufacturing, and AI infrastructure.

Global companies setting up such facilities operate through deeply integrated supply chains and often rely on highly specialised equipment for which there may be no domestic alternative. Requiring such equipment to go through certification processes designed for products entering the domestic market can add cost, delay investment, and undermine the very manufacturing activity that the policy is meant to promote. Goyal’s latest comments therefore raise a larger question about whether India’s standards regime has become too blunt an instrument for industrial policy. The answer cannot be to abandon BIS requirements or reopen the door to low-quality imports. Nor should domestic manufacturers that invested in building capabilities be asked to compete on an entirely unregulated playing field.

But the government needs a more nuanced framework that distinguishes between finished products entering the Indian market and specialised inputs being brought in to manufacture those products in India. It also needs to guard against standards becoming a proxy for protectionism, particularly in government procurement, where limiting competition can eventually raise costs and reduce incentives for Indian companies to become globally competitive.

Goyal’s intervention is therefore welcome, but it should be seen as more than a one-off concession to semiconductor or Japanese companies. It is an opportunity to revisit the larger architecture of the industrial policy. As the country moves from protecting domestic manufacturing to attracting the most sophisticated manufacturing ecosystems, the objective should be clear: regulations must help companies make in India, not make it harder for them to do so.