India's Ministry of Steel has deferred the implementation of the Quality Control Order (QCO) for finished steel imports by four months, addressing concerns raised by smaller importers. The order, initially set to take effect on June 13, 2025, has been delayed due to worries about shipments already in transit. This decision provides a transition period, allowing imports without Bureau of Indian Standards (BIS) certification for a limited time.
The QCO aims to ensure that only quality steel conforming to relevant BIS standards is available to end-users, preventing the import and domestic sale of substandard or defective steel products. As of June 2024, 145 Indian Standards were notified under the QCO, covering carbon steel, alloy steel, and stainless steel, with 138 of these standards enforced. The inclusion of six additional product standards in the QCO is currently in progress.
However, the steel ministry's quality control order has triggered concerns among Micro, Small, and Medium Enterprises (MSMEs) regarding import compliance. The Global Trade Research Initiative (GTRI) stated that the order could adversely affect MSMEs that rely on semi-finished steel imports, potentially leading to significant losses and plant closures. Many MSMEs have already paid for shipments that may now be deemed non-compliant.
Under the revised framework, importers must ensure that input materials like slabs, billets, or hot-rolled coils used to manufacture BIS-certified steel abroad also meet Indian standards. This applies to all steel and steel products covered under existing QCOs. Concerns have been raised about the feasibility and timing of the new compliance rules, as BIS certification for upstream suppliers can take six to nine months. Critics argue that the government enforced the traceability requirement with only three days' notice and without consulting stakeholders.
The recent deferral comes in response to requests from importers seeking clarification on the applicability of certain imported steel grades that comply with foreign standards but lack equivalent Indian Standards. To address this, a Technical Committee was formed, including members from BIS, steel producers, and end-users, to examine applications and determine whether imported steel grades fall under the QCO's purview.
India, the world's second-largest crude steel producer, remains a net importer of finished steel. Imports of finished steel have surged from 4.67 million tonnes in 2021-22 to 8.32 million tonnes in 2023-24, with Chinese imports increasing by 80% between January and July 2024. In contrast, exports of finished steel stood at 7.49 million tonnes, highlighting a growing trade imbalance. In fiscal year 2024-25, India was a net importer of finished steel for the second consecutive year, with imports reaching a nine-year high of 9.5 million metric tons.
In June 2024, India's steel exports declined to 3.4 lakh metric tonnes (LMT), compared to 4.3 LMT in May 2024. Imports of finished steel also decreased from 7.2 LMT to 5.5 LMT during the same period. Since April 2024, India has been a net exporter of steel, with net exports of 2.7 LMT, the highest since May 2023. However, for FY24, India was a net importer of steel, with imports exceeding exports by 8.3 lakh tonnes. Similarly, in April-June FY25, India was a net importer, with imports exceeding exports by 5.8 lakh tonnes.
MSMEs face challenges due to liquidity issues and high domestic steel prices, potentially exacerbated by safeguard duties. Industry leaders are urging the government to prevent domestic price hikes while protecting local manufacturers, advocating for balanced policies that support both large and small enterprises.
