Steel ministry's order on compliance for inputs can hurt downstream users

The Ministry of Steel (MoS) has issued an order dated June 13, 2025, mandating compliance with notified Indian Standards (IS) for steel inputs used as raw materials and intermediates for manufacture of specified steel products. The Central Board of Indirect Taxes and Customs (CBIC) has asked its field formations to ensure adherence to the new requirement for all shipments made from June 16 onwards. 

 

The MoS has notified IS for 151 steel and steel products through its Quality Control Order (QCO) dated August 29, 2024. The latest order gives a table listing 144 steel items with their IS and the inputs and their IS for making 124 of those items. For example, steel plates for pressure vessels for intermediate and high temperature service including boilers is covered under IS 2002: 2024 and the input for making that item is carbon steel cast billet, ingots billets, blooms and slabs for re-rolling purposes-specification covered under IS 14650: 2023. Compliance with IS for inputs and finished products must be ensured, says the MoS.  

 

Note no. 2A of the General Notes to the Import Policy notified by the commerce ministry says that goods that are subject to mandatory IS, as applicable to domestic goods, shall be required to comply with quality specified for that product as per same IS and that for compliance of this requirement, all manufacturers/exporters of these products to India shall be required to obtain license from the Bureau of Indian Standards (BIS). The latest order from the MoS means that even the inputs used by such license holders must comply with the applicable IS, implying that even suppliers of such inputs must be BIS license holders. Neither the MoS nor the CBIC has prescribed the documentation required to establish compliance with the latest MoS order.  

 

The condition that the foreign suppliers of items covered by QCOs must hold a BIS license has already severely limited the options of the steel users to procure their requirements from the best and cheapest sources. Many large global suppliers of such items are not interested in going through the processes for getting such licenses, as the Indian market is not large enough for them. Even those who hold BIS licenses will not be interested in sharing details of the inputs they use in their processes or the sources from where they procure their inputs. Even if they do so, the suppliers of such inputs to any manufacturer abroad are unlikely to entertain any requests from Indian importers. Effectively, the latest order from MoS makes it near impossible to import steel and steel products even from the manufacturers holding BIS license. 

 

Ajay Srivastav of Global Trade Research Initiative (GTRI) says that the latest notification from MoS has triggered fears of massive losses and plant closures among the downstream industries, especially the small scale industries, which rely on imported semi-finished steel. Many have already paid for shipments that may now be deemed non-compliant. It is surprising that the MoS order gave only 3 days for compliance with the new conditions. 

 

The widespread perception among the users of steel and steel intermediates is that through the QCOs the government is furthering the interests of a few domestic producers of steel and steel products at the expense of a large number of downstream user industries, especially the small ones. 

 

tncrajagopalan@gmail.com