Despite MSME objections, govt moves plan to curb special steel importshttps://indianexpress.com/article/business/ministry-of-steel-msme-jwa-narendra-modi-5794053/

Despite MSME objections, govt moves plan to curb special steel imports

Representations show that manufacturers like Tata-owned Tinplate Company of India (TCIL), O P Jindal group’s JSW Vallabh Tinplate Pvt (VTPL) and Parikh Group of Companies’s GPT Steel Industries (GPT) together have a capacity of 660,000 tonnes.

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Prime Minister Narendra Modi. The government is piloting a proposal to slap quality control regulations on tinplate and tin-free steel. (File Photo)

Overruling red flags raised by sections within the government and its potential impact on jobs and the MSME sector, the Ministry of Steel is piloting a proposal to slap quality control regulations on tinplate and tin-free steel, nearly four years after it unsuccessfully tried to do so.

The proposal, which would mandate domestic and foreign suppliers of these products to adhere to Indian quality standards. This could potentially act as a non-tariff barrier to curb imports of the material and comes despite concerns raised by other arms of the government that it may hit a “large” number of micro, small and medium enterprises involved in making products using tinplate steel — sheets of steel coated with a thin layer of tin that have specialised use in consumer products like cans, hairclips, pens.

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May hit cheap imports, inputs

Mandating foreign tinplate suppliers to adhere to BIS standards could discourage them from supplying to India making the move a non-tariff barrier. Also, this could hit MSME businesses making value-added products from tinplate steel. The ministry may have to ensure that the few domestic manufacturers of these products are able to supply to these MSMEs at reasonable rates.

The move comes in the wake of a strong push from the domestic steel industry, including fresh capacity being set up by domestic industry that is to come on stream shortly.

According to a note this month on the latest move, the Steel Ministry said it was “evident” that a “majority” of ministries and departments concerned supported the proposal. But it admitted that Ministry of Micro, Small and Medium Enterprises (MSME) had argued that the quality requirement be imposed not just on raw material but on “value added end products” too.

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Representations show that manufacturers like Tata-owned Tinplate Company of India (TCIL), O P Jindal group’s JSW Vallabh Tinplate Pvt (VTPL) and Parikh Group of Companies’s GPT Steel Industries (GPT) together have a capacity of 660,000 tonnes.

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Earlier comments by this ministry on the move in September 2017 showed that the MSME Ministry felt it would be “counterproductive to bring this sector under mandatory quality certification list.” (File Photo)

Along with JSW’s new Tarapur plant, the capacity is expected to ramp up to 910,000 tonnes by FY20, according to the ministry’s note. The note states that representations from Indian Tinplate Manufacturers Association (ITMA) showed that Indian tin mills have the “required capacity” to meet the market demand domestically and that “supply would far exceed the demand”.

The MSME Ministry raised concerns about this move. “This order will adversely affect a large number of MSME units engaged in manufacturing of value added products from tinplate. Unless and until similar quality order are brought for value added (end) products also, products will get imported instead of steel,” the MSME ministry submitted to the Steel Ministry in January 2019.

Earlier comments by this ministry on the move in September 2017 showed that the MSME Ministry felt it would be “counterproductive to bring this sector under mandatory quality certification list.”

Giving its conditional support, the Department of Commerce said that because it’s MSMEs that are “largely involved in this sector,” the Ministry of Steel may consider giving them an “appropriate staging period” so that businesses in India get due time to prepare themselves.

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The ministry in a release stated that it had decided to cover tin plates, used in food, food additives, drug and medicines, under the mandatory quality control regime and that “the process is being initiated”. (File Photo)

This isn’t the first time the Steel Ministry is planning to implement such quality standards on tinplate and tin-free products. The note says that the implementation was withdrawn in 2015 as per the directions of the then Hon’ble Steel Minister. It is not clear why then minister Narendra Singh Tomar had directed the withdrawal of this order. He did not respond to emailed queries from The Indian Express.

When asked about these objections, a Ministry of Steel official said: “The matter is under consideration.” Emails sent to MSME secretary Arun Kumar Panda and Commerce Secretary Anup Wadhawan remained unanswered.

Industry association ITMA wasn’t available for comment. But there is opposition from sections of industry. “To put it clearly, the idea is to restrict import, which would be a huge problem for the industry because we are already more expensive than other materials like plastic and paper packaging materials. This order will make our material more expensive,” said Sanjay Bhatia, president of the Metal Container Manufacturers Association (MCMA), which has made representations to the Steel Ministry against this move. The association also feels that restricting supply of tinplate steel to the three domestic producers may also cause problems.

The ministry’s Steel and Steel Products (Quality Control) Order, 2018, under which the new proposal has been moved, prohibits manufacturing, import, sale, hire and lease of such products unless they conform to “relevant standards” so that no “sub-standard” products are sold in the country. These items need to bear the BIS mark, which means domestic manufacturers have to obtain BIS certification mark licences and foreign suppliers to India will have to obtain BIS registration.

Last year, the ministry in a release stated that it had decided to cover tin plates, used in food, food additives, drug and medicines, under the mandatory quality control regime and that “the process is being initiated”.  So far, 53 such products, including carbon, alloy and stainless steel, are covered under this order, making up 85-90 per cent of steel products in the country, according to the ministry. “Government of India is concerned about reasonably large production and import of inferior quality of steel getting delivered to important end use segments such as power distribution, human health and safety of infrastructure and construction,” the ministry had stated in its release.