Government Expands Quality Control Norms for Steel

The Ministry of Steel has unveiled plans to enforce stringent quality control norms on all steel grades used in India, whether domestically produced or imported. This move aims to enhance the quality of infrastructure and hardware while curbing cheap imports that adversely affect domestic steel producers. Currently, 1,376 steel items fall under the Quality Control Order (QCO), and the new plan will add 1,000 more grades. The Bureau of Indian Standards (BIS) sets the standards, and only steel meeting these specifications will be allowed in the market. Steel grades not yet covered by BIS norms require a No Objection Certificate (NOC) from the ministry for import. A ministry official stated, “We aim to bring all steel grades under BIS standards within the next year, ensuring poor-quality steel doesn’t enter the market. This initiative serves as a non-tariff barrier to regulate imports and maintain product quality while keeping the domestic industry competitive.” Ritabrata Ghosh of ICRA noted that broadening the QCO could temporarily reduce imports, currently at about 1 million tonnes per month. However, its long-term impact depends on how quickly importers secure BIS certifications. The rising imports are challenging India's steel sector, which requires Rs 10 trillion in investment by 2030-31 to expand capacity from 180 million tonnes (MT) to the targeted 300 MT. The industry also faces competition from countries like Japan and Korea, with which India has free trade agreements (FTAs), allowing duty-free imports. Additionally, China is circumventing tariffs by exporting steel through Vietnam and building capacities in FTA countries. India, once a net exporter of steel, became a net importer last fiscal year, with the import-export gap expected to hit an eight-year high of 11 MT in FY25. Domestic HRC (hot-rolled coil) prices are trading at a $12-16/tonne premium compared to imports from China and Japan, further straining the sector. To address this, the steel ministry is advocating for both tariff and non-tariff measures. It has proposed doubling the basic customs duty on steel imports to 15%, which is under consideration by the finance ministry. The Directorate General of Trade Remedies (DGTR) is also investigating safeguard and anti-dumping duties on imports, including those from Vietnam. In addition, the DGTR is reviewing a proposal for a 25% safeguard duty on certain steel grades, regardless of origin. These measures aim to protect domestic producers, ensure fair pricing, and foster investment in the steel industry. (Financial Express)

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