The Telegraph
Thursday , April 17 , 2014
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Focus on benefits of product standards

New Delhi, April 16: Industry needs to develop common specifications on product quality, either through consensus or by adopting global norms, which will help exporters to compete globally and enhance the credibility of goods in the domestic market, a senior government official said.

Cabinet secretary Ajit Seth said the development of such standards did help to keep transaction costs low.

Such practices are followed by advanced countries, he added.

“India does not have a standard driven culture and the manufacturing sector has been accustomed to developing in an environment where standards have been lax. There is a need for an appropriate legislation to be put in place to provide an instrument to notify standards,” Seth said at a conclave on the role of standards in international trade organised by the CII and the commerce ministry.

“In many countries, product standards are developed through a voluntary consensus of companies engaged in producing competing products,” he added.

Seth said the lack of proper standards adversely impacted domestic sales and added to transaction costs for exporters.

“Despite the crucial role that standards play in facilitating transactions, India does not have a standard-driven culture. This has implications for both domestic and international sales.

“It is not surprising that Indian exporters have to incur high costs to comply with standards and technical regulations in main foreign markets.”

Technical regulations and standards occupy a significant space in the changing scenario of international trade as tariffs are going down globally.

The standards have assumed an important role with the WTO adopting some stringent norms.

“The purpose of standards is to facilitate information exchange, ensure quality and achieve efficient provision of public goods,” he added.

“If we are unable to act with clarity and speed, we run the risk of not only exposing our consumers to inferior goods but also slowly getting excluded from main export markets.”