Chinese steel may be entering India via Nepal illegally, raising concerns

EU urged to recognise domestic carbon costs as CBAM nears; SIMS easing and policy changes underway

Chinese steel may have been routed into the country through Nepal using forged manufacturer credentials and in quantities that Nepal cannot produce, said a senior official from the steel ministry.

 

These are the preliminary findings of the ministry after it received complaints that steel was being imported under the name of a Chinese licence holder who had not actually supplied the consignments.

 

“Our preliminary findings showed that steel was exported to India via Nepal in quantities and grades that it simply does not have the capacity to manufacture. It indicates the material originated in China, was sent to Nepal, and then routed into India under a different origin,” the official  said.

 

The matter has now been escalated and the ministry has written to Customs, Bureau of Indian Standards (BIS) and the Directorate of Revenue Intelligence (DRI) to investigate it thoroughly, he said. The official added that the government is sharpening its position in negotiations with the European Union (EU) on the Carbon Border Adjustment Mechanism (CBAM), which is scheduled to take effect in January 2026. This could significantly affect India’s steel exports.

 

He said India has conveyed that CBAM must take into account carbon costs already borne by Indian manufacturers, none of which are recognised by the EU at present.

 

“Whatever direct or indirect carbon costs Indian companies pay should be counted. At present, none of them are recognised by the EU,” he said. These costs include the forthcoming carbon credit trading scheme (CCTS) and a range of domestic levies that effectively function as carbon charges.

 

“These are not labelled as carbon taxes but act as carbon costs such as local taxes, water-related charges and green cess. They all need to be part of the CBAM calculation if the mechanism is to be fair,” he added.

 

CCTS, the government’s carbon-pricing framework that will underpin the Indian carbon market (ICM), is entering its final phase of preparation.

 

The official said the system for the steel sector is expected to come into effect from April, with India pressing the EU to recognise it under CBAM.

 

He also noted that the EU is reviewing some of its rules. “We have heard that the EU is considering relaxing some of the CBAM conditions, though nothing formal has been communicated,” he said.

 

As it negotiates with the EU to avert export losses, the government is also preparing an easing of import-compliance rules at home.

 

A significant overhaul of the steel import monitoring system (SIMS) is underway. While the mechanism will remain, the compliance burden will be sharply reduced. “We have recommended that SIMS be retained, but the data entry fields should be substantially reduced,” the official said.

 

Small-quantity importers stand to benefit the most. “They will get a single SIMS number valid for the entire year. They can import up to 10 tonnes per consignment, capped at 1,000 tonnes annually,” he said.

 

Export-linked units such as special economic zones (SEZs), export-oriented units (EOUs) and advance authorisation holders will receive similar year-long approvals. “They, too, will get one SIMS number for the whole year,” he added. Beyond trade and compliance, the ministry is reshaping its approach to stainless steel.

 

The industry has approached the Directorate General of Trade Remedies (DGTR) seeking relief on rising imports after the recent levy on steel from Vietnam excluded stainless steel.

 

The official said the matter is complicated by the market structure, where one major producer holds a dominant share and seeks protection, while several user industries depend heavily on imports.

 

To address these competing positions, the upcoming National Steel Policy will include a dedicated chapter on stainless steel for the first time.

 

 This policy shift aligns with efforts to strengthen the stainless-steel ecosystem, including Steel Authority of India Ltd’s (SAIL’s) plans to expand its Salem plant. The unit is preparing to scale up output.  

 

“Their installed capacity is about 350,000 tonnes, but production last year was around 150,000-160,000 tonnes. They first aim to utilise the full capacity and then scale up to one million tonnes annually,” the official said.

 

To support this expansion, the plant is also planning to import intermediate stainless steel raw material to reduce its dependence on scrap.

 

Raw material pressures continue to weigh on the sector. India imports nearly 90 per cent of its coking coal — a critical input — mainly from Australia.

 

“To reduce this dependence, public sector firms are examining potential overseas asset acquisitions for long-term security besides diversifying coal sources to the US and Russia,” the official said.

 

Amid these developments, the official also clarified that the government is not pursuing any merger between Rashtriya Ispat Nigam Ltd (RINL) and SAIL.

 

“There is no such proposal from the ministry. RINL is under a Cabinet-approved disinvestment process, and merging it with SAIL would shut that route permanently,” he said.