India may ease imports of specialty steel to address supply gaps

So far, companies were allowed to import these items only from a small list of government-approved suppliers under what was known as Quality Control Orders. This made sourcing difficult and “costly”.

Now, the government plans to temporarily suspend these strict quality-control rules for about 55 steel products for a one- to three-year period, according to the official quoted earlier, who spoke on the condition of anonymity.

The top beneficiaries would be steel exporters from China and Vietnam, among other countries.

While there is no immediate clarity on the impact these changes can have on the domestic steel prices in the absence of finer details, some experts said it could potentially result in a drop in local steel prices when the industry, including larger steel mills, seeks protection like safeguard and anti-dumping duties.

“NITI Aayog has recommended excluding certain grades from the Quality Control Order (QCO). The price impact remains unclear until the specific grades are finalized. However, with safeguard duties on steel imports likely to be extended, any quality-related exemptions may have a limited effect on the overall market,” said Dhruv Goel, CEO of Big Mint, a commodities market intelligence firm.

Specialty steel is a value-added product that undergoes processes like coating, plating, and heat treatment to acquire specific properties for strategic applications.

Once quality controls are suspended, Indian manufacturers will be free to buy from any suitable foreign supplier, including Chinese producers, the two government officials mentioned above said.

A gazette notification announcing this relaxation is expected within this month, the first of the two officials said.

While relaxation of import norms has been made for some of specialty steel categories, the steel ministry will retain quality control and licensing powers over steel imported in select sectors like healthcare devices and defence sectors on account of “national interest”, the official said. Quality controls on these national interest sectors will continue to be imposed.

Queries emailed to the steel ministry did not elicit a response until press time.

At present, India has 151 different steel quality standards for which QCO have to be taken covering various steel categories, including auto, electrical equipment, defence, medical and health care devices and construction. Which means, these can only be imported through licensed, government-approved suppliers. These could be India-based or companies registered abroad.

“There are 42 steel categories where the quality control orders will be suspended by three years, and another 13 speciality steel categories which will see suspension of quality control for one year. This follows the recommendation from a high-level committee for regulatory reforms,” the second official quoted earlier said.

The official added that some of the steel categories are covered under the newly announced production-linked incentive scheme of the ministry of steel. And hence, it made sense to allow imports as a stopgap measure till production of these special steel categories picks up here in the next year.

The PLI 1.2 scheme, announced earlier this month, covers 22 product sub-categories, including super alloys, CRGO, alloy forgings, stainless steel (long and flat), titanium alloys, and coated steels. Incentive rates range from 4% to 15%, applicable for five years starting FY26, with disbursal beginning in FY27.

A steel ministry official said, “We do not see any immediate impact on steel prices as most of these items are not made in India or have low production quantities. However, we are balancing out between demand from end user industries that want lower priced options and producers who are seeking protection.”

As a counter-measure, safeguard duty will continue to be imposed on steel coming in from China, Korea and Japan; while anti-dumping duty has been imposed on Vietnamese offerings.

The provisional data of the ministry of steel for April to September indicates that the domestic finished steel production stood at 78.445 million tonnes (MT), up by 10.9%, and domestic consumption was at 78.86 MT (up by 8.3%). India was a net importer of finished steel at 3.345 MT, down by 29.4%, outpacing exports at 2.810 MT, which was up 21.6% during this period.