Steel traders urge govt to repeal quality control order

Say the move restricts imports, which is essential for lower manufacturing costs

Steel traders have urged the government to repeal its quality control order and allow them to import raw materials.

The recently issued order mandates registration of certain steel products like hot rolled sheets/plates with the Bureau of Indian Standard (BIS), a move which traders say would restrict imports. 

The Bombay Iron Merchants'Association (BIMA), which represents over 900 members and executes trade worth Rs 50,000 crore annually, in a letter to the steel ministry said, "The proposed draft of Steel and Steel Products Quality Control Order 2014 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 engineering sector that are governed by the International Organization for Standardization (ISO) and BIS. So, why is there a need to regulate the raw materials? The government wants to restrict imports of steel into India and deprive us from the alternate source of raw material procurement," said Nikunj Turakhia, Administrative Director of BIMA.

BIMA has alleged in the letter that domestic steel producers including Steel Authority of India Ltd (SAIL), Tata Steel, JSW Steel, Ispat Industries and Bhushan Steel overcharge domestic buyers. They sell steel at 15-20% premium to domestic buyers, it has alleged, adding that therefore steel imports were necessary. 

"The government must not allow the domestic primary steel producers to continue charging premiums from users and continue imports," said Turakhia.

According to trade sources, India's steel imports surged 71% to touch a record high of 9.31 million tonne in the financial year 2014-15, putting pressure on domestic producers. Because of cheap imports, Indian producers continued to match the landed cost of imported steel which put pressure on their margins.

India's steel imports were recorded at 7.38 mt in 2009-10, 6.66 mt in 2010-11, 6.86 mt in 2011-12, 7.93 mt in 2012-13 and 5.45 mt in 2013-14. 

India import steel from China, Japan and Russia.

Meanwhile exports have been slow and plunged 8% to 5.5 mt last fiscal. 

Steel consumption in India grew by 3.1% to 76.35 mt in the financial year 2014-15 as compared to 74.09 mt in 2013-14. India's steel production rose to 88.12 mt in 2014-15 from 87.67 mt in the previous year.