Ministry of Steel Releases Official Clarification on BIS Certification for Intermediate Steel Products

In order to apply 151 BIS Standards, the Ministry of Steel has issued a clarificatory order dated 𝐉𝐮𝐧𝐞 𝟏𝟑, 𝟐𝟎𝟐𝟓. In August 2024, the most recent Quality Control Order was issued. No new QCO has been issued since then. This provides quality assurance and fair practices in the steel industry. The intermediate materials like 𝐇𝐨𝐭 𝐑𝐨𝐥𝐥𝐞𝐝 (𝐇𝐑) 𝐚𝐧𝐝 𝐂𝐨𝐥𝐝 𝐑𝐨𝐥𝐥𝐞𝐝 (𝐂𝐑) coils that are involved in the manufacture or import of final steel products would need to comply with 𝐁𝐈𝐒 𝐒𝐭𝐚𝐧𝐝𝐚𝐫𝐝𝐬.

Important points related to the Clarificatory Order: 

1. Mandatory Use of ISI-Marked Input Products:  The new clarification addresses 151 Indian Standards for steel Raw products; all steel products recognized by the BIS application must use intermediate products that have the ISI Mark. This clarification intends to close the loopholes that are currently being pursued in the supply chain. It will also enhance the quality of products, help Indian manufacturers, and ensure fair competition.

2. Unfair Advantage to Importers: Currently, the import of finished steel objects is not at the same level as Indian manufacturers of finished steel objects, as Indian steel object manufacturers are required to use only intermediate Products that conform to BIS Standards. It would be incorrect to disadvantage domestic steel object makers by exposing them to non-BIS-compliant intermediate input products when imported products do not face the same exposure.

3. Risk of Substandard Imports: As the only fast-growing and large economy in the world, there is a very strong likelihood that cheap steel will be forced into the Indian market unless sufficient controls are put in place on the import of quality steel. It needs to be noted that if intermediate inputs, which are the culmination of HR coil, CR coil, and coated steel, are not BIS compliant and are substandard.

4. Increase of Price: While it is feared that the 13th June Order made by the Ministry of Steel has left open the possibility of a price increase. India's steel capacity is at 200 Million Tonnes, which is sufficient to fulfil domestic demand. Therefore, there does not appear to be this possibility of a price increase.

5. Threat to Domestic Steelmakers: The situation poses a serious threat to domestic steel industries in India, especially small and medium-scale steelmakers. If massive dumping of substandard steel occurs, it could not only destabilize the market price point but also threaten the livelihood of lakhs of people working in the steel value chain.
India’s Strong Steel Demand Growth: India is the only major economy in the world where steel consumption has continued to grow at more than 12% per annum in the last three years. Other major steel-consuming economies are seeing either flat or declining demand.

6. Future Steel Demand & Investment: This impressive growth is driven by the Government of India’s large public sector infrastructure development pipeline, higher investments in real estate construction/real estate, and increasingly larger levels of domestic manufacture of capital goods. India will need approximately 300 metric tonnes (MT) of steel production by 2030, and about 400 MT by 2035 to satisfy demand. This would mean a capital investment of around USD 200 billion in production capacity by 2035.

Conclusion

The recent classification by the Ministry of Steel signifies the quality of the steel raw materials to prepare the finished products.  As the industry continues to expand to become a global leader and powerhouse player, there is no way to ensure constraints and growth opportunities are not aligned between rapid growth with sustainable and competitive opportunities that align with domestic and competitive long-term strategic goals. It is a substantial step forward for the domestic industry, and necessary action is needed urgently.