Indian Government Set to Tighten Quality Control Measures on Steel Imports
The Indian government is taking significant steps to strengthen quality control measures on steel imports due to concerns regarding the influx of low-quality steel, particularly from China. In light of a recent review conducted by the steel ministry, that highlighted the escalating risks posed by global trade diversions impacting the domestic steel sector, the government has recognized the urgency to clamp down on this issue.
Rising Tide of Low-Quality Steel Imports
During the first five months of the current fiscal year, India experienced a transition from being a net exporter of steel to becoming a net importer, with imports totaling 3.45 million tonnes (mt) and exports only amounting to 1.92 mt. This shift can be attributed to the market conditions, including lackluster demand and high import duties imposed by countries such as the United States and the European Union. Opportunistically, international steel producers have been using India as a dumping ground for their low-cost steel.
Loophole in Steel Imports Process
Currently, steel imports can take place based on a no-objection certificate (NOC) issued by the steel ministry, even for multiple grades of steel subject to quality control orders (QCOs). The existence of this loophole has permitted the importation of 1,127 out of 1,279 steel grades covered under 151 QCOs. By amending and expanding the purview of QCOs, the government aims to close this loophole effectively.
An official from the steel ministry confirmed, “This loophole will soon be addressed by expanding the scope of QCOs,” addressing the concerns and ensuring that only the grades of steel unavailable locally are allowed through NOCs.
India’s Response to Import Challenges
The impact of imports lacking Bureau of Indian Standards (BIS) certification has compelled the government to pass a mandate, which will come into effect in October 2023. As per this mandate, such imports must secure approval from the steel ministry. Currently, India imports about 400,000 tons of non-BIS compliant steel annually, with an estimated valuation of around Rs 42 billion.
In response to the rising imports from not only China but also Southeast Asia, the steel ministry has initiated consultations to engage stakeholders and identify possible solutions. Several countries globally, including the United States, Canada, and countries from the European Union, have imposed safeguard duties of 25% on steel imports to safeguard their domestic industries. Taking inspiration from these protective measures, nations like Turkiye, Indonesia, and Japan have also implemented similar actions to shield their industries.
Anti-Dumping Investigation Launched
Moreover, the Indian government has launched an anti-dumping investigation specifically targeting cold-rolled non-oriented electrical steel imports from China. The investigation was initiated following complaints made by South Korean and Taiwanese manufacturers, who themselves have business operations in India.
Final Thoughts
The Indian government’s tightening of quality control measures on steel imports is a necessary step to protect the domestic steel industry from low-quality steel flooding the market. By addressing the loophole in the current steel imports process and engaging with stakeholders, the government is demonstrating its commitment to creating a level playing field for all players in the steel industry and ensuring that domestic producers can compete fairly. This move, coupled with the upcoming BIS certification mandate and the launch of an anti-dumping investigation, serves as a comprehensive strategy to bolster the Indian steel sector against unfair trade practices.
