Effective immediately, all government ministries, departments, and their affiliated agencies—including public sector undertakings (PSUs), societies, trusts, and statutory bodies—have been asked to prioritise iron and steel products manufactured within India. This includes flat-rolled steel, bars, rods, and railway materials. These materials must meet the “Melt & Pour” condition, meaning the steel must be melted and poured into its initial solid form in India., making it beneficial for domestic makers of the alloy.
Industry souces say, China continues to be amongst the target nations with these revised procurement rules.; while there are some attempts to slow down imports coming in from other Asian naitons, with which India has an FTA.
Chinese imports stood at 2.4 million tonnes for April – Februaruy, down 5 per cent y-o-y; while Korea and Japan saw imports at 2.7 mt and 1.92 mt levels, up 7 and 70 per cent, y-o-y respectively. Overall imports were at 8.9 mt, up 16 per cent y-o-y, with exports being at 4.4 mt, down 34 per cent. India was a net importer.
“Some protection is being provided to domestic manufacturers. But we need to see how the policy plays out,” an industry participant said.
Government continues to be a key procurer of steel in India using it across infra, rail and defence sectors, with at least 25 – 30 per cent of the country’s finsihed steel production, making way to these sectors. In good quarters, the numbers are far higher, said industry sources.
Reciprocal Clause
The policy introduces a reciprocal clause, wherein entities from countries that restrict Indian companies from participating in their government procurement will be barred from bidding in India for steel-related items, unless explicitly permitted by the Ministry.
Production flattening
The last available Steel Ministry data show that mills except JSPL have slashed production of finished steel or kept it flat in the 11-month period of the current fiscal year (April – February), citing “unplanned outages”.
Finished steel output (excluding JSPL) barely budged at 65.4 million tonnes (mt), down from 65.7 mt last year. Total production hit 133 mt, up just 5 per cent from 126.5 mt a year ago.
Large private players like JSW and Tatas have near flat finished steel production, with y-o-y growth of being less than two per cent. In the case of JSW, the 11-month production was 21.4 mt, and for Tatas, it was 20 mt. For AMNS India, there was a near 2 per cent drop to 6.7 mt. In the case of PSU majors like SAIL and RINL, the cuts were in the 3–16 per cent range, or at 14.4 mt and 2.8 mt, respectively.
The share of small steel producers increased to 45 per cent of total production (60.4 mt) compared to 43 per cent for the same period last year (55.3 mt), while PSU production to total output dropped to 13.9 per cent, as against 14.7 per cent in the year-ago-period.
Domestic value addition
Additionally, the revised policy states capital goods used in production of the alloy, such as furnaces and rolling mills, must achieve at least 50 per cent domestic value addition.
Announced on the eve of the new financial year, this is set to run for five years, with the possibility of extension.
The policy, issued by the Ministry of Steel, supersedes its earlier iteration and seeks to enhance self-reliance while supporting Indian manufacturers in a competitive global market .
The policy applies to procurement contracts exceeding ₹5 lakh and extends to projects funded by the central government, including central sector schemes and centrally sponsored schemes executed by states and local bodies.
Another key feature of the policy is its emphasis on domestic value addition and a closer definition of this term.
Domestic value addition is defined as the proportion of value added in India to the total value of a product, excluding imported content and domestic taxes.
Bidders, whether manufacturers or authorised agents, must self-certify compliance with these criteria, with there being penalties including forfeiture of earnest money deposits and potential blacklisting for false declarations.
For capital goods, certification from statutory or cost auditors is required to verify the 50 per cent domestic value threshold.
The Ministry of Steel will oversee implementation through a Standing Committee chaired by the Secretary (Steel). This body will monitor compliance, review product lists, grant exemptions, and address grievances.
Exemptions may be allowed if specific steel grades are unavailable domestically or if project demands exceed local supply, but such requests must be substantiated with evidence.
Industry concerns
However, industry observers say the policy’s success hinges on effective enforcement and the ability of domestic producers to meet quality and volume demands.
The Standing Committee’s role in resolving disputes and ensuring fair pricing will be crucial, especially in cases where sole bidders quote exorbitant rates.
