India’s iron and steel imports experienced a sharp decline of 28% in November, falling to $1.7 billion, compared to $2.4 billion in the same period last year. The drop comes amid growing concerns from Micro, Small, and Medium Enterprises (MSMEs) over delays caused by port blockades and restrictions on imported steel.

 

Key Factors Behind the Decline

                1.            Delay in No Objection Certificates (NOCs):

The Steel Ministry’s delay in issuing NOCs for importing specific steel grades has hindered the availability of affordable imported steel. These NOCs are essential for steel products not covered under the Bureau of Indian Standards (BIS) norms, but approvals have been stalled for months.

                2.            Push for Safeguard Duties:

Large steel companies are lobbying for safeguard duties to limit steel imports and protect domestic producers. However, MSMEs argue that such measures would increase steel prices, severely impacting their operations and export competitiveness.

                3.            Rising Imports from China:

Between January and July 2024, steel imports from China surged by 80%, reaching 16.1 lakh tonnes, up from 9 lakh tonnes during the same period in 2023.

 

MSME Concerns Over Domestic Steel Prices

 

MSMEs, especially engineering exporters, are struggling with high domestic steel prices and liquidity issues. S.C. Ralhan, Chairman of the Hand Tool Association, expressed concerns about rising input costs. “If safeguard duties are imposed, MSMEs will face severe challenges in managing costs and meeting export demands,” he warned.

 

The Federation of Indian Export Organisations (FIEO) also emphasized the need for balance. FIEO Director General Ajay Kumar suggested that the government should ensure domestic steel producers maintain stable prices if additional import duties are introduced.

 

Government Policies: A Double-Edged Sword

 

The Steel Ministry has implemented several quality control measures, such as the Quality Control Order (QCO) and the Steel Import Monitoring System (SIMS), to regulate steel imports. While these policies aim to protect domestic steelmakers, they have led to:

                •             Delays in clearances due to technical glitches and unclear regulations.

                •             Confusion among importers, as BIS NOCs are being demanded for products outside the scope of QCOs.

 

The Bigger Picture

 

India remains the world’s second-largest crude steel producer, with 144.3 million tonnes produced in FY24. However, the country is a net importer of finished steel, with imports outpacing exports in recent years.

 

As global demand fluctuates, MSMEs are urging the government to create fair policies that balance the needs of domestic producers and industries dependent on imported steel. The future of India’s steel sector will depend on how effectively these concerns are addressed.

 

What’s Next?