The manufacturing landscape in India is set for a seismic shift as the Ministry of Heavy Industry rolls out the ‘Machinery and Electrical Equipment Safety Regulation 2024'
The manufacturing industry is already grappling with a complex web of regulations, and a new stringent regulation has been added to the mix. Recently, The Ministry of Heavy Industry has introduced the 'Machinery and Electrical Equipment Safety Regulation 2024' to ensure that safety practices in India align with global standards. While these new standards aim to enhance safety and compliance, they are expected to significantly impact Indian manufacturers, primarily micro, small, and medium enterprises (MSMEs), which previously also complied with over 400 regulations. The new regulation will impact over 50,000 types of machinery, including industrial equipment like pumps, compressors, cranes, and transformers.
Manufacturers must adhere to stringent safety requirements set by the Bureau of Indian Standards (BIS). However, many Indian manufacturers, particularly MSMEs, may struggle to meet these new standards within the given one-year deadline (August 2025), as they often operate with limited resources. Under the new machinery safety standards, all manufacturers must register with the BIS and obtain a BIS standard mark or certificate of conformity. Compliance will be governed by three distinct safety standards: Type A, B, and C. Type A standards are general safety guidelines for all machinery. At the same time, Type B covers generic safety requirements, and Type C standards are machine-specific safety guidelines.
While the regulation does not apply to machinery exclusively manufactured for export, most companies produce goods for domestic and export markets, making BIS certification necessary for their entire product range. The requirement for prior BIS approval for both production and imports could create bottlenecks in production and impact the availability of essential machinery and equipment. Fiscal and Technical Burden: The new machinery safety standards will impose a significant financial burden on MSMEs. Compliance costs vary widely, ranging from Rs 50,000 to Rs 5 lakh, depending on the type and complexity of the machinery. These costs cover certification, safety upgrades, risk assessments, employee training, and the technical requirements to bring machinery up to standard.
Many MSMEs operate within thin margins, and these costs may lead to closure for some businesses. In addition to financial challenges, many smaller firms need help with a technological gap, as they may need access to advanced machinery or technology that complies with the new standards. Retrofitting existing equipment or purchasing new machinery will require a significant investment, which may be out of reach for smaller businesses.
Furthermore, MSMEs often need a more skilled workforce to implement the necessary safety measures, which can strain already tight budgets. Another major challenge is the complexity of the regulations themselves. The technical language used in the order is complex for smaller firms to navigate, and the lack of detailed implementation guidelines from BIS has only added to the confusion.
MSMEs, which frequently operate with limited administrative resources, struggle to understand how to comply with these multi-layered standards. More precise instructions would enable many firms to proceed with the necessary upgrades. Impact: This regulation will have a significant effect. India's machinery and electrical equipment imports, totalling $25 billion in FY2024, could face delays as companies await BIS approval. With 39.1 per cent of these imports originating from China, delays could worsen supply chain bottlenecks, further slowing industrial growth.
Domestic manufacturers catering to the local and export markets must successfully navigate the new compliance landscape, which adds to the regulatory burden on an already stressed sector. While machinery intended for export is not subject to the regulation, most manufacturers produce goods for both domestic and international markets. This means that even businesses focused on exports will need BIS certification for their entire product line. Consequently, the exemption offers limited relief, and manufacturers must adhere to the same safety standards. Challenges in Implementation: Adopting a phased approach to implementation is imperative to address these challenges.
The current one-year compliance timeline is unequivocally inadequate, particularly for MSMEs that lack the financial and technical resources to meet stringent safety standards. Extending the deadline to afford MSMEs more time to adapt is not just a preference but a necessity. A three-year timeline for meeting Type A standards and an additional five years to comply with Type B and C standards is not just a suggestion but a requirement.
This approach aligns with the phased regulatory models in other countries, such as the European Union, where industries are routinely allocated five to seven years to transition to new safety standards. Furthermore, implementing the standards in phases based on the machinery's complexity and risk level is not just a recommendation but a mandate. This approach allows firms to prioritise safety upgrades without jeopardising their operations. For example, enforcing horizontal safety standards (Type A) followed by vertical (Type B and C) standards as businesses gain the technical and financial capacity to comply is not just an option but a necessity.
The medical devices industry in India provides a practical example, where voluntary registration was initially encouraged, followed by mandatory standards based on the risk level of the device. This model is not just a suggestion but a blueprint that could be adapted for the machinery sector, providing a more manageable path toward compliance.
The Way Forward: Government support is crucial in helping MSMEs meet the new safety standards. Financial assistance, such as subsidies or low-interest loans, must help smaller firms afford the necessary upgrades to their machinery. Additionally, the government must conduct awareness campaigns and training programs to educate businesses on the importance of these regulations. It is imperative to establish a dedicated helpdesk to guide MSMEs through the certification process, alleviating confusion and streamlining compliance efforts. MSMEs often lack the expertise needed to navigate such complex regulations, and without access to trained consultants, many businesses will struggle to meet compliance requirements. Here, industry associations can and must play a pivotal role. By negotiating bulk certification agreements, conducting training sessions, and providing technical guidance to MSMEs, these associations are ideally placed to bridge the gap between government regulations and industry readiness, ensuring a smoother transition for smaller firms. Certifying technical professionals who can assist in implementing these standards is essential. The Machinery and Electrical Equipment Safety Regulation-2024 represents a necessary step toward improving manufacturing safety in India. However, the challenges facing MSMEs in complying with these new regulations are substantial. Therefore, a phased approach to implementation, combined with targeted government support, is crucial to ensure that the benefits of these new regulations are fully realised without unduly burdening the MSMEs, the backbone of Indian manufacturing.
(The Author is Vice-Chairman of Sonalika ITL Group, Vice-Chairman(Cabinet minister rank) of the Punjab Economic Policy and Planning Board, Chairman of ASSOCHAM Northern Region Development Council and President of Tractor and Mechanization Association(TMA); Views expressed are personal)
