In a major relief to domestic producers, the sharp rise in steel imports could slowdown with the delay in clearance of imported consignments at the ports due to non-issuance of no objection certificate by the government.
The NOC delay is expected to push up domestic steel prices and provide a succour to domestic steel companies which are reeling under a sharp fall in prices amid slowing demand.
As per the Ministry of Steel and Bureau of Indian Standards regulations, steel produced domestically and imported into India should conform to Bureau of Indian Standards (BIS) standards. 151 BIS standards covering 1,376 grades have been notified and covered by Quality Control Orders(QCO).
However, certain grades of steel, not covered under BIS may be imported with the NOC from the Ministry of Steel. But, the Ministry has been delaying NOC claiming that significant quantity of steel imports do not conform to BIS standards.
Imports piling up
Some of the steel import consignments, especially from Japan are piling up at the ports. It has raised serious concern for both the importers and exporters. Following this, Japan has already stopped shipping steel to India.
The Ministry pointed out that imports of cheap and lower quality of steel adversely impact the domestic steel industry with over 1,000 small producers accounting for 41 per cent production capacity.
Earlier, the steel industry had proposed a 25 per cent safeguard duty on specific steel imports, but the demand has not been accepted by the government.
Manish Kedia, one of the steel importers in Mumbai said demanding BIS certification for products not covered under QCOs is not fair and this move will push up cost of many infrastructure projects.
Import-export policy
The government should put up a clear import-export policy and cannot keep tinkering it often, he added.
Jathin Kaithavalappil, Assistant Vice President, ChoiceBroking said the delay in government NOCs on pending steel imports might reduce supply and create upward pressure on domestic prices. With a revival in infrastructure and automotive demand, this may benefit domestic producers, he added.
Anirudh Garg, Partner and Fund Manager, Invasset PMS said when imports are constrained, domestic producers typically gain pricing power due to reduced competition.
“Restricting imports through NOC requirements could be seen as a non-tariff barrier, an alternative to direct import duties. This approach aligns with the government’s focus on supporting domestic manufacturing,” he said.
While imposing import duties outright could escalate trade tensions and attract WTO scrutiny, non-tariff measures offer a more subtle means of achieving similar objectives, he said.
