India's Factories Face Headwinds as Tightening Crude Supplies Exacerbate Production Costs and Supply Chain Disruptions

India's Quality Control Rules for Fasteners Disrupting Manufacturing Competitiveness

Amid growing volatility due to the Iran war-induced crude shock, a new report by the Global Trade Research Initiative (GTRI) has warned that India's quality control rules for fasteners are pushing up costs, disrupting supplies, and hurting manufacturing competitiveness across sectors ranging from automobiles to infrastructure.

The report finds that the current regulatory framework is creating supply bottlenecks for an industry that forms a critical backbone of manufacturing. Fasteners, such as bolts, nuts, screws, washers, rivets, and studs, account for less than 1 per cent of overall production costs, but their absence can halt entire assembly lines or delay infrastructure projects, making them disproportionately important for industrial supply chains.

According to the report, one of the biggest challenges is the rigid "one-product-one-licence" compliance structure under the Bureau of Indian Standards (BIS), which is not suited to the highly fragmented fastener industry where multiple variants are often produced on the same machine. This structure is creating duplication, delays, and uncertainty, with separate BIS certifications for different fastener variants-based on size, grade, coating, and application-significantly increasing compliance costs.

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Industry estimates show that compliance costs can run between Rs 80,000 and Rs 1 lakh per licence, with Rs 22,000 to Rs 25,000 per variant test, while setting up in-house testing facilities can cost Rs 30 lakh to Rs 40 lakh. These compliance requirements are especially hurting micro, small and medium enterprises, with some suppliers exiting the market altogether and certified suppliers gaining pricing power.

The report also highlighted shortages in specialised fasteners, with quality cross recessed screws, particularly drywall and chipboard screws, not presently available in India, creating sourcing challenges for manufacturers. India's fastener trade reflects capability gaps rather than import dependence, with the country exporting fasteners worth USD 882.3 million to key markets including the United States, Netherlands, United Arab Emirates, and Germany.

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At the same time, India imported $1.13 billion worth of fasteners from China, Japan, South Korea, and Germany, mainly for specialised and high-precision applications. This pattern shows that India exports what it produces efficiently and imports what it needs but does not produce competitively, the report said.

Warning against tighter restrictions, the report concluded that "free and frictionless trade in fasteners is essential", noting that even though fasteners are low-value components, delays caused by certification bottlenecks or supply disruptions can significantly raise production costs and weaken India's broader Make in India ambitions.