Gujarat Industries Push Centre To Ease QCO Restrictions Hurting Local Production

According to industry sources, a QCO certificate is now required for the import of certain goods. The goal behind this regulation is to encourage the use of locally manufactured machinery and raw materials. However, stakeholders warn that any disruption in supply can hurt production targets and hinder job creation.

“There is a disruption in the supply of yarn. Its price has increased. Moreover, specialty yarns are not produced locally. Surat produces six crore metres of fabric annually, which has the potential todouble. However, this can happen only when the QCO restriction on the machinery is removed,” reads a statement from the Southern Gujarat Chamber of Commerce and Industries (SGCCI). Its representatives recently met Miss Shubra Agarwal, Textile Trade Advisor to the central government, to press for the removal of these restrictions. 

The dye producers in the state are facing similar challenges. Intermediates like H Acid, K Acid, and Vinyl Sulphone have been put under QCO restrictions. However, the government has provided temporary relief till August 15, 2025. Post this date, imports will not be allowed, informed Shailesh Patwari, former president of Gujarat Chamber of Commerce and Industry (GCCI). 

“Prices have risen by about 20 per cent in about two months in each of the intermediates used in the production of dyes. This will in turn increase the cost of Indian dyes, 60% of which are exported,” Patwari warned.

Most of these intermediaries come from China, where production costs are lower. Patwari pointed out that if Chinese manufacturers start forward integrating (producing dyes domestically), they could pose serious competition to Indian exporters. “Although Indian manufacturers enjoy a goodwill among foreign buyers, the advantage applies only if the price gap is small. If the difference is significant, then the balance can tilt in favour of Chinese manufacturers,” he said.

Certain products such as machinery and intermediates are not manufactured in India. If these are not imported, domestic production would suffer. “These are weaving machinery used in the production of fabrics and embroidery (for value addition). For Indian products, it is easier to get QCO licence. But there are very less Indian products in these categories, so we have to rely on imports,” said Ashish Gujarati, former president of SGCCI. 

SGCCI also highlighted that 90% of home textiles (within the technical textile segment) were imported earlier. With the use of imported machinery and raw materials, its share has dropped to 55%. However, since the introduction of QCO, there has been no growth in the home textile sector. The chamber further said that although India has Free Trade Agreements (FTAs) with UK, Australia, and the UAE, reliance on local raw materials has made Indian products less competitive in these export markets.