A foreign buyer has filed a QCTD complaint against us. What should we do first?

Read the complaint for what is actually alleged: quality, short shipment, delay or non-performance. Assemble the contract, specifications, pre-shipment inspection and test reports, shipping documents and the correspondence, and respond within the time DGFT gives. Offer settlement where the claim has merit; contest with evidence where it does not. Do not ignore it: a default finding follows.

Can we use QCTD against a foreign supplier who shipped defective goods?

Yes. An Indian importer files on the DGFT portal against the foreign exporter. The complaint is taken up through the Indian Mission in the supplier's country. It is most effective where the supplier values its Indian market and least effective against a one-off seller; it does not replace contractual remedies.

Does a QCTD order bind a court or arbitrator?

No. It is an administrative determination under the Foreign Trade Policy with consequences for the IEC holder's standing and benefits. The underlying contract claim is still decided under the contract's dispute clause. The two run in parallel, and what is said in one should be consistent with the other.

QCTD Meaning and Process: DGFT Trade Dispute Resolution

A quality complaint from a foreign buyer used to be a matter between the parties. Since the Foreign Trade Policy created the Quality Complaints and Trade Disputes mechanism, earlier the Committee on Quality Complaints and Trade Disputes, it can also be a matter between the exporter and the Directorate General of Foreign Trade, with consequences for the exporter's IEC and scheme benefits. This article explains how the mechanism works and how an Indian exporter, or an Indian importer with a complaint of its own, should use it.

What it covers

The mechanism, under Chapter 8 of the Foreign Trade Policy and the Handbook of Procedures, takes two kinds of matter:

Quality complaints: goods that are substandard, do not conform to specification, or are defective.
Trade disputes: short shipment, non-delivery or delay, non-payment, and other contractual failures where the conduct affects India's standing as a trading partner.

It is open to foreign buyers and suppliers, Indian importers and exporters holding an IEC, export promotion councils and trade bodies, and Indian Missions abroad that flag complaints received locally. Filing is online on the DGFT portal and carries no fee.

How a complaint proceeds

Filing. The complainant files with supporting documents: contract, invoices, specifications, test reports, correspondence.
Forwarding. DGFT notifies the Indian party through the IEC-linked portal and e-mail and calls for a response within a stated time. A complaint against a foreign party is routed through the Indian Mission in that country.
Investigation. The regional authority reviews the evidence and may call for third-party testing or a hearing, in person or virtual.
Decision. The committee may dismiss the complaint, record a caution or warning, or, where an Indian entity is found to have erred, impose a penalty or restrict its import-export benefits. It may also record a settlement: replacement, refund or payment.
Appeal. An order can be appealed to the higher authority under the Foreign Trade (Development and Regulation) Act.

The emphasis is on amicable settlement. Most complaints that are answered promptly with documents end in a settlement or a dismissal; the adverse orders fall on parties who did not respond.

What it means for an Indian exporter

Three points deserve attention. First, the forum is the regulator that issues your IEC and administers your export schemes; an adverse finding has regulatory, not merely reputational, consequences. Second, the test is documentary. A buyer's complaint that the goods were off-specification is met by the contract specification, the pre-shipment inspection certificate, the test report on the batch shipped and the shipping documents showing what was tendered. An exporter that keeps those for every consignment has its defence ready; one that does not is arguing from memory. Third, the QCTD process runs in parallel with the contract's own dispute mechanism, and positions taken in one should be consistent with the other.

What it means for an Indian importer

The mechanism gives an importer a way to bring a foreign supplier's failure before the Indian state, with the Mission abroad taking it up locally. It works where the supplier has a continuing interest in the Indian market. It does not substitute for the contract's remedies, and it should be used alongside them, not instead of them.

Reducing the risk of complaints

Specify in the contract what will be tested, how, by whom and against what standard, and keep the report.
Use pre-shipment inspection by a recognised agency for buyers or markets with a history of disputes.
Keep photographs and tally records of what was packed and sealed.
Respond to the first buyer e-mail about quality as if it were already a complaint; it usually is.

What to do if you receive one

Diarise the response date DGFT has set.
Assemble the contract, specification, inspection and test documents, shipping documents and the full correspondence.
Decide, on the evidence, whether to settle or contest, and reply in writing with the documents attached.
Attend the hearing if one is called, with the same file.

In short

The Quality Complaints and Trade Disputes (QCTD) mechanism under Chapter 8 of the Foreign Trade Policy and Handbook of Procedures lets a foreign buyer, an Indian importer or a trade body file a complaint against an IEC holder, or against a foreign counterparty, on the DGFT portal without a fee.
DGFT forwards the complaint, calls for a response, may seek testing or a hearing, and can dismiss, caution, or restrict the IEC holder's benefits or impose a penalty where the complaint is made out.
Complaints against foreign parties are routed through the Indian Mission in that country; the committee's leverage there is diplomatic rather than statutory.
For an Indian exporter, the danger is an adverse order that affects the IEC and scheme benefits. A documented, prompt response resolves most complaints before that stage.

Questions we are asked about this

A foreign buyer has filed a QCTD complaint against us. What should we do first?: Read the complaint for what is actually alleged: quality, short shipment, delay or non-performance. Assemble the contract, specifications, pre-shipment inspection and test reports, shipping documents and the correspondence, and respond within the time DGFT gives. Offer settlement where the claim has merit; contest with evidence where it does not. Do not ignore it: a default finding follows.
Can we use QCTD against a foreign supplier who shipped defective goods?: Yes. An Indian importer files on the DGFT portal against the foreign exporter. The complaint is taken up through the Indian Mission in the supplier's country. It is most effective where the supplier values its Indian market and least effective against a one-off seller; it does not replace contractual remedies.
Does a QCTD order bind a court or arbitrator?: No. It is an administrative determination under the Foreign Trade Policy with consequences for the IEC holder's standing and benefits. The underlying contract claim is still decided under the contract's dispute clause. The two run in parallel, and what is said in one should be consistent with the other.

Primary sources

The instruments this article relies on. Links go to the issuing authority; search the document number there for the text in force.