BIS Wants Traders to Give Away Their Biggest Business Asset

A regulator has no business asking companies to surrender their trade secrets. Yet that is exactly what India’s BIS licensing framework effectively expects traders to do.

As more products are brought under the Quality Control Order (QCO) regime, traders wishing to remain part of the supply chain increasingly face an impossible choice. Comply with the licensing framework and reveal the manufacturers behind their products, or protect the supplier relationships on which their business is built.

No serious regulatory system should place businesses in such a position.

The debate around QCOs has largely centred on manufacturing, imports and product quality. Far less attention has been paid to the impact on traders, distributors and importers who form an indispensable part of India’s industrial supply chains. The current licensing framework is designed exclusively around manufacturers, as though products travel directly from factory gates to factory floors. Anyone involved in industrial procurement knows that is simply not how modern commerce works.

A trader’s greatest asset is not just the inventory sitting in a warehouse. Inventory can be purchased by anyone with sufficient capital. The real asset is the supplier network behind that inventory.

Building that network takes years. Reliable manufacturers are identified through countless meetings, factory visits, product evaluations, negotiations and commercial experience. Relationships are forged over time, often after expensive mistakes and failed partnerships.

They represent intellectual capital every bit as valuable as a patent, a proprietary process or a customer database.

The BIS licensing framework effectively devalues that investment.

By requiring traders to disclose the identity of manufacturers to customers as part of the compliance process, the framework removes the commercial advantage that justified the trader’s existence in the first place. Once the sourcing relationship becomes known, customers can approach the manufacturer directly. Unless the trader has an exclusive arrangement—which is uncommon in most industrial sectors—the years spent building that relationship become commercially worthless.

The government is effectively asking businesses to reveal one of their most valuable commercial assets simply to remain compliant.

This is not how competitive markets function.

Traders do not merely buy and sell products. They create markets. They aggregate inventories from multiple manufacturers, maintain stock that producers themselves are often unwilling to hold, consolidate fragmented demand, provide technical support and ensure that manufacturers receive components when they need them rather than months later.

They also reduce dependence on a single source of supply. By maintaining relationships with multiple manufacturers across different countries and regions, traders make supply chains more resilient. Ironically, the current framework weakens precisely those businesses that provide this resilience.

This exposes a deeper flaw in the philosophy behind India’s QCO regime.

The framework assumes that quality assurance begins and ends with the manufacturer. It barely acknowledges the rest of the supply chain. Yet manufacturing today is supported by an ecosystem of importers, authorised representatives, distributors, stockists and traders, each performing a legitimate commercial function.

The European CE conformity framework recognises this reality. Responsibility for compliance is not confined to manufacturers alone. Importers, distributors and other economic operators all have clearly defined obligations within the conformity assessment framework. The system recognises the supply chain rather than pretending it does not exist.

India has chosen a different path.

Instead of creating an inclusive compliance ecosystem, it has built a manufacturer-centric licensing regime that leaves traders outside it while simultaneously expecting them to disclose the very commercial relationships that make their businesses viable.

This is one of the many reasons I remain unconvinced by the QCO approach itself. India’s ambition should be to produce goods that conform to internationally accepted standards, not to create an increasingly elaborate licensing bureaucracy around them. Product quality should be enforced through accountability, traceability and robust market surveillance, not by restricting participation in the market or compelling businesses to reveal proprietary commercial relationships.

The government often speaks of improving the ease of doing business. But ease of doing business is measured not only by the number of approvals required or the speed at which applications are processed. It is also measured by whether regulation understands how businesses actually operate.

A licensing framework that forces traders to choose between regulatory compliance and protecting the supplier networks they have spent years building is not strengthening Indian manufacturing. It is weakening one of the very links that keeps its supply chains functioning.