Sudden BIS Need Restricts Raw Steel Import, Hits MSMEs

Steel traders and MSMEs across the country have urged the Centre to remove the abrupt restrictions on imports and withdraw the mandatory quality control certification.

From this month, the Central Board of Indirect Taxes and Customs (CBIC) has decided to enforce strict quality control orders for the imports of steel. Failing to adhere to the stringent norms, the consignments could even face rejection. 

Steelmakers have raised concerns that the sudden decision will hurt imports, affecting the manufacturing, which will in turn delay the delivery of finished goods. 

The Federation of Associations of Maharashtra (FAM), the apex body of associations of traders in Maharashtra, in a letter to the Minister for Steel HD Kumaraswamy, raised objections against the June 13 notification, mandating a Bureau of Indian Standards (BIS) certification for the import of raw steel that went into effect from June 16.  

Make In India

To promote ‘Made in India’, the Centre has mandated that overseas exporters, whose goods are imported in India, need a BIS certification. The latest notification tries to achieve this objective. However, it has put overseas exporters and local importers on the wrong foot, as it does not provide sufficient time to acquire the BIS certification.

Indian importers buy slab, ingot, milled, and other raw steel materials mainly from China, Europe, Vietnam, Thailand, Indonesia and Malaysia, to make steel products. 

FAM president Jitendra Shah told The Secretariat that June 13 was a Friday. June 14 and June 15 being the weekend, were non-working days. So, in the absence of a BIS certificate, importers couldn't receive their shipment from June 16.

He suggested that the government should rather allow imports in all contracts entered before June 16, if payment is done, while the renewal applications are pending.

One Lakh Units Affected

Calling the current situation as "crisis-like", Ravi Hundia, joint secretary of Gujarat's Stainless-Steel Tubes and Pipes Manufacturers Association (SSTPMA), cautioned that close to one lakh units, mostly MSMEs, will be affected, since close to 50 per cent of the raw material requirement is imported.

He also warned that restrictions on imports can create a monopoly in the local market, leading to 10-20 per cent increase in raw material prices. “Contracts are made well in advance, part payment is done in advance, production and shipments take weeks. Our money is blocked, and we cannot get our goods stuck at the ports. This will escalate costs and hurt the viability of the business, as margins are narrow,” he said.

Hundia also opposed the abrupt BIS certification requirement for hot rolled (HR) material. “No company is BIS certified for HR products. And these imports are stuck,” he warned.

Scarcity Of Material

A Bengaluru-based businessman said on condition of anonymity that import restrictions will delay the receipt of raw material and eventually the delivery of products to clients.

“There is a scarcity of raw material. This is a loss for the country. Since the final product is manufactured in the country and is BIS certified, it is an indirect assurance that the raw material is not sub-par,” he added. 

Imports Inevitable

Jitendra Sanghvi, a member of Mumbai-based Metal and Merchant Association, argued that some grades of raw material, for example that which is used in the auto industry or aerospace, are not made in the country, and importing is the only way out.

He opposed the haste in bringing the notification. “The business cycle is 60-90 days. It takes close to six months to obtain a BIS certification. There is no objection to the certification, but the industry should be given sufficient time to adhere to it. If we are informed well in advance, we can be prepared,” said Sanghvi.