India’s steel industry, which is crucial for the country's economic growth, is currently facing a significant crisis. Over 10,000 steel user units across the country are grappling with operational and financial difficulties due to prolonged port delays, burdensome regulatory requirements, and the slow pace of clearance procedures at customs. According to the Global Trade Research Initiative (GTRI), these delays and complications are seriously affecting production timelines and export capacities, threatening the competitiveness of India's steel sector in the global market.
The GTRI has pointed out that the issues faced by the steel user industry stem from multiple factors, with port inefficiencies being the most critical. The prolonged time taken for shipments to clear customs and reach factories is leading to disruptions in the supply chain. These delays have been exacerbated by unclear and cumbersome regulatory processes, which, while aimed at protecting domestic steel manufacturers, have instead created a difficult environment for industries dependent on imported steel.
The think tank also noted that the government’s policies, which are designed to protect domestic steelmakers, have unintentionally penalized industries that rely on imported steel for their manufacturing processes. Policies such as import restrictions, mandatory quality checks, and the Steel Import Monitoring System (SIMS) are meant to protect local producers but have added complexity and delays to the supply chain. The GTRI stressed that these measures are creating confusion and inflating costs for businesses, with the added burden of complying with various regulatory standards like the Bureau of Indian Standards (BIS) certifications.
In addition to port delays, the think tank also raised concerns about Free Trade Agreements (FTAs), particularly those that allow Indian firms to collaborate with foreign producers and import steel at discounted rates. While such agreements are intended to foster international trade, they may unintentionally encourage competition from foreign producers, making it difficult for domestic firms to compete, especially when cheap steel is entering the market.
GTRI’s founder, Ajay Srivastava, highlighted that the failure of the Steel Import Monitoring System to function efficiently and the excessive scrutiny on imports are causing delays and adding to the financial strain on the industry. For example, the SIMS, which requires importers to register detailed declarations of their consignments, often malfunctions, further hindering the clearance process.
The situation is worsened by the Quality Control Orders (QCOs) introduced by the government, which mandate the registration of certain steel products with the Bureau of Indian Standards. While these measures aim to ensure the quality of imported steel, the process of obtaining No Objection Certificates (NOCs) from the BIS is often slow, leading to further delays in getting the necessary approvals for imports.
As a result, more than 10,000 steel user units are struggling with severe financial stress, with many unable to keep up with production and meet export commitments. The GTRI has called for the government to streamline these processes and digitize the regulatory framework to reduce delays and ensure smoother operations for steel users.
Moreover, the think tank has urged that if import restrictions are deemed necessary, they should be implemented through clear, well-defined policies rather than the complex procedural roadblocks that currently exist. This would allow industries that depend on imported steel to function efficiently without facing the additional burden of navigating red tape.
India’s steel industry is divided into two categories: steelmakers and steel users. The latter, which includes industries that use steel as a raw material to produce value-added products, has been particularly affected by these challenges. The GTRI has emphasized the need for reforms to ensure that both steelmakers and steel users can operate optimally, which would support India’s broader economic ambitions, including its goal of becoming a global manufacturing hub.
