New Delhi [India], June 17 : The recent regulation by the Ministry of Steel has the potential to disrupt supply chains and may impose heavy compliance costs on India's micro, small, and medium enterprises (MSMEs), according to a report by the Global Trade Research Initiative (GTRI).
GTRI said "the abrupt change could disrupt supply chains and impose heavy compliance costs on MSMEs reliant on imported semi-finished steel".
It adds that new regulation has triggered panic among MSMEs that depend on imported semi-finished steel, with fears of large-scale losses and plant closures
The rule, issued by ministry on June 13, mandates that not just the finished or semi-finished steel products, but also the raw materials used to manufacture them must comply with Indian Standards (IS) and be registered on the Steel Import Monitoring System (SIMS) portal.
The move applies to all products covered under India's Quality Control Orders (QCOs).
Earlier, foreign exporters could ship finished steel to India after getting certification from the Bureau of Indian Standards (BIS).
However, under the new regulation, their raw material, like billets, slabs, or hot-rolled coils, must also meet BIS standards.
For instance, if a Malaysian firm supplies steel slabs to a Vietnamese company that converts them into steel sheets before being exported to India, both companies must now be BIS-certified.
It also highlighted that many importers have already paid advances for shipments arriving between June and August, which now risk of being labelled non-compliant, even though contracts were signed months earlier.
Adding to the concern is the exemption given to finished products like welded pipes from the new traceability rule.
GTRI noted that there was no need for such compliance, especially when BIS officials already inspect and certify finished products at foreign factories.
It added "BIS certification for upstream suppliers can take six to nine months. Yet the Ministry has enforced the new traceability requirement with only three days' notice and no stakeholder consultation. Also, when BIS officials have already inspected and audited the products, say CR coils, at the foreign entity's facility physically and ensured compliance with the Indian standards, then where is the need to ensure the compliance of the raw material used to make it?"
GTRI asks the government to reconsider the move with a warning that without relief or extension, the order could result in widespread factory closures and financial distress.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor