Steel Import Rule Sparks Panic Among MSMEs, Could Trigger Factory Closures: GTRI

A sudden regulatory change by the Ministry of Steel has left India’s micro, small, and medium enterprises (MSMEs) reeling, with fears of disrupted supply chains, mounting compliance costs, and potential plant shutdowns. The Global Trade Research Initiative (GTRI) has flagged the new rule as a serious threat to the survival of steel-dependent MSMEs.

Issued on June 13, the rule mandates that not only 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 order applies to all products under the government’s Quality Control Orders (QCOs).

Earlier, exporters had to simply get finished steel certified by the Bureau of Indian Standards (BIS). Today, upstream raw materials like billets, slabs, or hot-rolled coils also have to comply with BIS standards even if they are processed overseas before imports.

“This abrupt change could cripple small manufacturers who rely on imported semi-finished steel,” said GTRI. “MSMEs are panicking over possible losses and shutdowns.”

The report further highlighted a glaring issue: many importers have already paid for shipments expected between June and August. These orders, contracted months earlier, could now be rejected as non-compliant.

One example cited involves a Malaysian firm supplying slabs to a Vietnamese company that turns them into steel sheets for export to India. Under the new rule, both entities must be BIS-certified—a process that could take 6 to 9 months.

GTRI also pointed out inconsistencies, such as the exemption granted to certain finished goods like welded pipes, and questioned the need for raw material traceability when BIS already audits and certifies final products abroad.

Imposed with only three days’ notice and no consultation, the measure has attracted scathing criticism. GTRI called on the government to reconsider or suspend the order, stating that without instant relief, large-scale factory closures and financial hardship are unavoidable.