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Towards a zero-defect India

LiveMint logoLiveMint 14-03-2017 Rajeev Kher

An important catchphrase in the policy lexicon of the present government is “zero defect, zero effect”. The connotation of the expression is that Indian growth will cause least damage to the natural environment (zero effect) and the products and services produced in India will conform to the highest quality standards (zero defects). This innocuous-looking phrase has very comprehensive implications for India’s industry. It was intended to be a necessary complement to another prominent catchphrase in the policy discourse: “Make In India”.

Should making in India largely address domestic consumption or should global integration be an intrinsic part of the strategy for India’s economic development? This has been an important point of debate in the recent past. Regardless of which perspective is chosen, the quality of products and services will play an important role.

A high-quality product is a tribute to the capacity of the domestic industry to absorb technology and use advanced skills of production at par with global standards. It prepares the domestic industry for connecting with global supply chains. It is also a tribute to the discerning consumer, who has become important as the middle class expands. These arguments add value proposition to the adoption of high standards in our manufacturing and service industries.

A sound quality-assurance system reassures the consumer, helps absorption of higher technology in manufacturing, adds greater value to products and services responding to a quality-assurance system, develops and retains high-quality scientific manpower and filters out low-quality imports.

A domestic industry groomed over decades in a protectionist environment is bound to shy away from a high-quality assurance ecosystem. While it will encourage the imposition of such a system on others, it would prefer to keep itself out. It will seek to avoid subscribing to an allegedly high-cost quality regime, argue that such a system will create disincentives in a price-sensitive market, and stress that the workforce’s low capacities will not allow adoption of a high-quality assurance system.

These are all self-preservationist arguments. An important way in which Indian industry can fight its present low competitiveness is by pushing high-quality products in the global market. India’s technologically superior manpower endowment and technical capacities—aided by its global ambition and the imperative of expanding its markets to integrate with global supply chains—should tempt it into adopting a high-quality manufacturing and services ecosystem.

A pursuit of recognition as a high-quality producer of goods and services requires a unique standards architecture and corresponding physical infrastructure. Adequate attention has not been paid to mandating standards. A default mechanism of technical regulation should rely upon voluntary adoption of standards. However, in several areas a prescriptive approach is necessary, particularly where it touches upon the safety and preservation of human, animal and plant life.

Strong industry resistance has not allowed the adoption of such an ecosystem. The Bureau of Indian Standards (BIS) is the central agency for development of product and service standards. It has assumed the role of a certification, conformity assessment and even accreditation agency, defying the principle of conflict of interests. Several other agencies responsible for sectoral standards notify their standards under the BIS Act. Most work in silos. The Quality Council of India is jointly promoted through industry-government cooperation. It has ambition but lacks teeth. The unitary structure, and sensitivity to human health, has allowed FSSAI (Food Safety and Standards Authority of India) to evolve a relatively effective architecture.

It is quite clear that the presence of multiple agencies, the organizations’ different ecosystems, the varying approaches of sectoral ministries and corresponding industries, varying degrees of global integration and involvement of small-scale and technologically less evolved companies, has created an environment of inconsistency and incoherence. This does not reflect well upon India in the context of the global quality ecosystem. And it is often interpreted as a manipulable and weak system. Our pharmaceutical quality regulatory system suffered for several years because of this global perception. It began to recover only after India presented a strong response to allegations of counterfeiting.

India must institutionalize a “National Mission on Quality”. The mission would create a “National Standards Coordination Agency” integrating all the vertical institutions on the subject at a higher level of control and direction. In an emerging economy, the continued involvement of the state in core functions of quality assurance is necessary. The mission would create an enabling legislation for a globally contemporary standards ecosystem for products and services, and roll out a vision on quality. It would integrate institutions by developing cohesive policies on standards development and their adoption, conformity assessment and accreditation. It would develop a high level of capacity for international rule-making. It would run a coordinated programme for infrastructure development in collaboration with the private sector, and remove ad-hocism. Above all, it would promote a major area for investment from the private sector. This will be an important step towards making a zero-defect India.

Rajeev Kher is a former commerce secretary and currently member, Competition Appellate Tribunal. The views expressed are personal.

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