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Cheap steel crackdown: Centre may seize poor quality imports

Those sellers failing to conform to BIS standards risk being raided and searched by the appropriate authority.

Written by Priyadarshi Siddhanta | New Delhi | Published: May 17, 2015 12:00 am
steel, bis steel, bureau of indian standards, quality control order, qco, steel rod, wire rods, aluminium zinc alloy, business news Fresh steel products, which would be brought under the ambit of BIS Act 1986 and result in mandatory certification from the bureau include high carbon steel wire rods.

Cracking down on sale of cheaper quality steel, the government will constitute an “appropriate authority” and equip it with search and seizure powers to detect storage and sale of steel products, which fail to conform to the quality norms laid down by the Bureau of Indian Standards (BIS).

In its draft quality control order (QCO) prepared on Tuesday, the steel ministry has also directed that manufacturers of all steel products must register themselves with the BIS within 45 days of the QCO being notified in the official gazette. The move comes amid Prime Minister Narendra Modi’s views earlier this week asking domestic steel companies to gear up for producing 300 million tonne of steel by 2025, which includes nearly 3 lakh crore expansion and modernisation programme by public and private sector steel companies. It is aimed at curbing inflow of cheaper and poor grade steel from abroad, mainly from neighbouring China which is hitting the margins of domestic steel companies.

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Fresh steel products, which would be brought under the ambit of BIS Act 1986 and result in mandatory certification from the bureau include high carbon steel wire rods, pre-painted galvanised sheets and coils and aluminium zinc alloy metallic coated steel strips and sheets. Last year the steel ministry had asked producers of 15 steel items including thermo-mechanically treated bars to ensure BIS certification before selling them to buyers.

Those sellers failing to conform to BIS standards risk being raided and searched by the appropriate authority to be headed by a joint secretary level officer and comprising officials from BIS and directors or commissioners of industries of the state governments, “ according to the draft QCO.

The appropriate authority is to be empowered to “enter and search any premises and seize any steel and steel products….if they do not conform to specified standards,” according to the draft QCO. Such products, if confiscated, would be disposed off as scrap as per the scheme of testing and inspection of BIS, it says. The order also empowers the authority to issue directives to manufacturers and dealers if it notices them violating BIS standards. It can inspect books or documents of the steel producers or suppliers.

Till last month, the government was contemplating to levy fiscal measures like upping the import duty or imposing a safeguard duty to disincentivise cheaper steel imports into India. But following recent deliberations between, the officials of steel and finance ministries, it emerged that imposing stringent QCO would be far more effective in containing such imports, which domestic producers say could adversely impact the government’s Make in India programme. Modi last year had asked various ministries to initiate measures to cut down on needless imports, which triggers unease within the local industry.

The newly constituted Indian Steel Association, which is the apex body of the nation’s steel manufacturers had petitioned the government on November 4 last year to initiate firm measures to contain imports, which had risen to a “historic high” of over 8 MT in the last fiscal.

 

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  1. Barka Farooki
    May 17, 2015 at 5:01 am
    Indian has long way to go to be compeive internationally in heavy industry including steel. Globalization and FDI is double edge sword and trying to find an easy way to ban international import is not going to cut in the long run. Only high quality, low production cost and free market principles is going to save us.
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      LS
      May 17, 2015 at 6:31 am
      You realize that Quality and cost are at opposite ends of each other. There is nothing in this world that is cheap and best. You get what you pay for. The reason for ban is not that they are trying to scuttle the imports. It is to prevent subsequent property and human loss down the line due to poor quality of steel. If the suppliers can meet the standards they are welcome else they need to stay out. We should enforce quality standards for every import we do including food items. Just like other countries we should reject sub-standard materials being supplied. Your suggestion that we should not ban sub-standard imports that do not meet standards is preposterous.
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      1. R
        Raj
        May 17, 2015 at 3:04 pm
        Ban sub-standard products from imports as also those produced in India. Most of the imported steel meets global standards of quality, which cannot be said of much of Indian steel. Cost and quality are not opposite. There are other factors like economies of scale, productivity, efficiency, etc. that can produce cheaper steel with better quality. China is ample proof of that. Govt has rightly declined to raise the import duty on steel but is only checking quality.
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        1. R
          Raj
          May 17, 2015 at 3:00 pm
          Imported steel from China and other nations is of far better quality than Indian steel, particularly that of the small steel re-rollers and producers of rebar. They follow far more stringent quality standards in line with global standards. Indian steel producers are selling at abnormally high prices to Indian consumers (US$600) compared to imported steel (US$400) of the same grade. Thus, until Indian producers lower prices, they will face compeion from imports even though imports face additional cost of transportation and import duty. India economy will be boosted by cheap steel which forms the backbone for development of the economy. Cheap cannot be equated with poor quality as that is only an Indian mindset. Cheap steel with same or better quality is good for India.
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          1. C
            Citizen
            May 17, 2015 at 5:02 pm
            There is an impression in consumers that many of our products/services are sub standard so it is high time to implement the laws to to keep up the quality/satisfaction of the consumers at the highest level even by cancelling licenses and sending the culprits behind the bars and confiscating the ets. Jaihind
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