MSME steel importers are seeking a Government exemption from a new quality control order and BIS approval requirements, arguing the mandate has fueled a sharp spike in prices and left their businesses in financial jeopardy. A new Government quality control order on steel is pitting India’s micro, small and medium enterprises against regulators, with importers claiming the measure has triggered a sharp rise in domestic prices and supply shortfalls. In a letter dated 17 September, the Metals and Stainless-Steel Merchant’s Association (MASSMA) has asked the Ministry of Steel to allow exemptions for shipments for which advance payments were made before the Quality Control Order (QCO) took effect in June. Mint has reviewed a copy of the letter. The importers argue the new rule, which requires all foreign steel mills to secure approval from the Bureau of Indian Standards (BIS), has created a non-tariff barrier and caused Indian prices for key products like the 304 series of stainless steel to surge disproportionately compared to international markets. “We trust that the concerns of Micro, Small and Medium Enterprises, particularly the micro and small segments, will be duly acknowledged by the Ministry of Steel,” the letter said. The QCO, which was notified on 13 June and ordered for implementation just three days later, has had a significant financial impact on MSMEs, which are reliant on cheaper imports as they operate on thin margins. The Federation of Associations of Maharashtra (FAM) wrote to the Steel Ministry on 18 June, stating that the new rule has put approximately ₹150 crores of advance payments in jeopardy. The QCO mandates that in addition to finished steel products, intermediate raw materials such as stainless-steel slabs and hot and cold-rolled coils, must also be BIS-certified for all imports with a bill of lading dated on or after 16 June.
On 11 July, the Ministry exempted mandatory BIS specifications for raw materials in cases where the material was shipped on or before 15 July. This puts MSMEs—which include secondary steel makers and are largely dependent on imported inputs—in direct opposition to the Government, whose stated rationale for the QCO was to check steel dumping into the country. According to MASSMA’s letter, while the cost of 304 series stainless steel rose between $60 and $90 per ton in other countries such as China, South Korea and Indonesia during 24 August to 10 September, Indian prices for the same product increased by $113 during the same period. The 304 series is used to make kitchen appliances, industrial equipment like valves and pipes and certain automotive components. An email query to the Union Steel Ministry remained unanswered till the time of publishing. The legal battle over the QCO has also intensified. A Writ Petition was filed in the Madras High Court by Shree Ramdev Metalex LLP, challenging the Steel Ministry’s 13 June notification as being “bad in law and contrary to BIS Act, 2016 and the BIS Rules, 2018.” While the High Court sided with importers, the Union Steel Ministry appealed the decision to the Supreme Court, Mint reported on 28 July. According to the Steel Import Monitoring System (SIMS) Portal, in June, 0.797 million tons (mt) of finished steel were slated for imports under 25,759 such applications. South Korea, with a 34.6% share, followed by China, with a 30.6% share of May imports, were the top two sources. The highest share of the imports in June—29.1% were for the automobile and auto components sector, SIMS data showed. Experts note that India’s steel makers also face stringent non-tariff barriers on their exports and are dependent on domestic demand. The Government is reportedly trying to ease some of the friction, with Mint reporting on 19 September that it is “expediting BIS approvals for Steel Mills in Taiwan.”
Source : https://www.livemint.com/industry/manufacturing/msme-steel-importers-quality-control-order-government-exemption-11758510894329.html
