India’s Transition Facilitation QCO Order 2026: Scheme II Needs a Buyer’s Permission

Stop assuming Scheme II is a shortcut

If your business sources goods covered by one of ten named Indian quality control orders, the Transition Facilitation (Quality Control) Order, 2026 changes who may supply you and on what terms. It does not make certification easier by default. It adds a gate before the certificate: a permission from India's Department for Promotion of Industry and Internal Trade (DPIIT), granted to the buyer, not the factory. This brief sets out what the instrument says, what it leaves open, and what has not yet been tested. It is not legal advice.

The Order is an optional alternative to the existing BIS licence route, not a replacement. The factory licence under Scheme II is only available to a manufacturer supplying a company that holds DPIIT permission.

What the instrument is

The instrument is S.O. 3417(E), published in the Gazette of India, Extraordinary, Part II, Section 3(ii), No. 3283, on 25 June 2026¹. It was made by the Ministry of Commerce and Industry (DPIIT) under section 16 read with section 25(3) of the Bureau of Indian Standards Act, 2016. It came into force on publication (clause 1(2)), so it has been binding since 25 June 2026.

It is an Order of the Central Government, so it is the primary source of obligation here. Everything else in this brief is commentary, and is labelled as such.

Who is bound, and what it covers

The Order applies to goods covered by the quality control orders listed in its Schedule (clause 2). The Schedule names ten¹:

Two parties carry obligations. A manufacturer holding a Scheme II licence may supply only to a permission-holder (clause 3(2)). The permission-holder, which must be a company incorporated under the Companies Act, 2013 (clause 4(1)(a)), must ensure the goods conform to the applicable Indian Standards (clause 3(3)). The Bureau of Indian Standards, with DPIIT, carries out market surveillance (clause 3(4)).

The Order contains no numeric threshold and no definitions clause. Entries 4 and 5 in the Schedule print an issue date of 27 October 2020 against orders titled 2024; I have reproduced the Schedule as printed and not corrected it.

The dates that matter

Applications for permission are accepted for twenty-four months from commencement (clause 5(1)), which on my reading runs to about 25 June 2028. The Order itself lasts five years from commencement and is then rescinded unless extended by Gazette notification (clause 6(1)), which on my reading is about 25 June 2031. Permissions granted before rescission continue for their stated period unless suspended, modified or withdrawn (clause 6(2)). The Order does not say what happens to existing Scheme I licences or stock; it does not withdraw Scheme I.

What compliance actually requires

The Order text asks for less than the commentary suggests. In the text:

• Conforming goods, marked under a Scheme II licence, supplied only to a permission-holder (clauses 3(1)–(3)).

• An application assessed by an Implementation Committee chaired at Additional or Joint Secretary level, with members from DPIIT, Consumer Affairs, Commerce, the Directorate General of Foreign Trade and BIS (clause 4(3)).

• Permission "subject to such conditions as may be specified therein" (clause 4(2)), so the binding detail sits in each permission letter, which I have not seen.

The Committee assesses technical capability, demonstrated experience, quality assurance across the supply chain, conduct and compliance history, and then two further factors joined by "or": a commitment to establish supply chain capabilities in India through technology adoption, design or research, or compliance with the relevant quality control order for three continuous years without default (clause 4(4)). It may rely on documents, declarations, undertakings and independent assessments (clause 4(5)).

That is the gate. Scheme II removes the factory audit; the Committee substitutes an assessment of the buyer. The assessment is discretionary: the Order lists no pass mark, no decision deadline and no appeal route, and clause 7 refers any question of interpretation to DPIIT itself.

Instrument, guidance and interpretation

Several commonly repeated features are not in the Order text. Law-firm commentary describes quantity limits in the permission letter, quarterly consignment returns to DPIIT, an annual compliance report certified by a chartered accountant, and an annual review of permission³⁴. These may well appear in permission letters or in DPIIT's guidelines, which clause 5(2) says will set out the application process, documentation, entitlements, monitoring and compliance. I did not locate those guidelines. A trade-policy think tank was still asking DPIIT to issue them on 27 June 2026². Treat each of these as unconfirmed until you see the permission document or the guidelines.

Commentary also disagrees on character. One firm reads the three-year compliance track as an alternative to proving investment commitments³; another stresses that for foreign manufacturers a tangible investment and supply chain commitment is expected to be key⁴. The Order text supports the first reading on its face, since the two factors are joined by "or". The second may describe how the Committee is expected to behave. The Order does not settle which.

Descriptions of Scheme II also differ: self-declaration of conformity in one account³, registration based on testing and documentation without an on-site audit in another⁴. This is a point to check against the Bureau's own conformity assessment regulations, not the commentary.

Where it does not reach

The Order does not touch products outside the ten listed orders. It does not replace Scheme I, and a manufacturer may stay on that route. It says nothing about the nationality of the licensed manufacturer. Because only Companies Act, 2013 companies can hold permission, a foreign manufacturer needs an Indian counterparty to apply²⁴; the Order does not itself state that.

No enforcement has been observed. I found no granted permission, no suspension or withdrawal and no ruling. Clause 4(6) allows the Central Government to suspend, modify or withdraw a permission for breach of conditions, misrepresentation of material facts or non-conformity of products, after a hearing. The Order contains no monetary penalty. Every consequence of non-compliance is therefore untested.

What a decision-maker should do

Stop assuming that a Scheme II licence on a supplier's side removes the compliance burden from yours. Under this Order the burden moves to the buyer: you would be the party applying, answering to a Committee, and responsible for conformity (clause 3(3)).

A workable decision test follows from the text. If you buy covered goods and your supplier already holds, or can readily obtain, a Scheme I licence, nothing in the Order obliges you to move, and the permission route offers advantage only if inspection friction is your binding constraint. If you do consider it, you have until about June 2028. Before committing, obtain the DPIIT guidelines and a sample permission letter, and test your three-year compliance history against clause 4(4), because that history may let you avoid a localisation commitment.

1. Business Standard / PTI — GTRI urges DPIIT to issue detailed guidelines for new quality certification — 27 June 2026 — https://www.business-standard.com/amp/industry/news/gtri-urges-dpiit-to-issue-detailed-guidelines-for-new-quality-certification-126062700482_1.html

1. CMS INDUSLAW — DPIIT Introduces Transition Facilitation QCO: A Simpler Route to BIS Certification for products covered under Specified Quality Control Orders — 23 July 2026 — https://cms-induslaw.com/en/ind/publication/dpiit-introduces-transition-facilitation-qco-a-simpler-route-to-bis-certification-for-products-covered-under-specified-quality-control-orders

1. Lakshmikumaran & Sridharan Attorneys — Transition Facilitation (Quality Control) Order, 2026: A new route to BIS compliance — 12 August 2026 — https://www.lkslaw.com/insights/articles/transition-facilitation-quality-control-order-2026-a-new-route-to-bis-compliance