Steel traders urge govt to drop latest Quality Control Order

Traders' body argued in a letter to steel ministry that the govt seeks to take away the rights of users

Steel traders and users have urged the government to drop the latest move to widen the ambit of an extant Quality Control Order and to allow them to procure raw material from alternative sources, meaning imports.

The recent QCO move was to bring more products like hot rolled sheets/plates under mandatory registration with the Bureau of Indian Standards (BIS). Bombay Iron Merchants’ Association (Bima), with a little over 900 members and trade worth Rs 50,000 crore annually, has argued in a letter to the steel ministry that the government seeks to take away the rights of users.

“The proposed draft has created panic in the steel industry. Industrial raw materials like hot rolled sheets and plates are used by well regulated industries like white goods and the engineering sector that are governed by the International Organization for Standardization and BIS. So, why is there a need to regulate the raw materials? The government wants to restrict import of steel into India and deprive us from the alternate source of raw material procurement,” said Nikunj Turakhia, administrative director of Bima.

According to the argument, producers have adopted a duel pricing policy for buyers in India and abroad. They charge buyers here 15-20 per cent more over those abroad.

“Therefore, steel import is necessary for survival of the trade and also for user industries, for lower cost of manufacturing. Hence, the government must not allow the domestic primary steel producers to continue charging premiums from users, and to continue imports,” said Turakhia.

According to trade sources, India’s steel imports surged  71 per cent to a record high of 9.3 million tonnes in 2014-15. With cheaper import, Indian producers continued to match the landed cost of imported steel, which put pressure on their margins.

Steel imports were 7.4 mt in 2009-10, 6.7 mt in 2010-11, 6.9 mt in 2011-12, 7.9 mt in 2012-13 and 5.45 mt in 2013-14. Exports were 3.25 mt in 2009-10 and nearly 6 mt in 2013-14; they then fell to 5.5 mt in FY15. India imports steel from China, Japan and Russia.

Steel consumption in India grew by 3.1 per cent to 76.35 mt in 2014-15 as compared to 74.1 mt in 2013-14. Production rose to 88.1 mt in 2014-15 from 87.7 mt the previous year.