Why are Steel Associations and Federations opposing proposed Quality Control Order?

Since Steel and Steel Products Quality Control Order 2014 was proposed, the merchants’ association BIMA, FAM and more recently FII have galvanised efforts to revoke it. Implementation of this order is said to jeopardise the quality of supplies, cost of production and international business relationships.

As per the proposed Steel and Steel Products (Quality Control) Order, several steel products would require mandatory Bureau of Indian Standards (BIS) registration, which currently takes about 10-12 months of processing. Anguished merchants see this as an unnecessary addition to the process terming it as ‘Inspector Raj’. The fact that this would highly affect the imports of Hot Rolled steel, the merchants would be forced to pay 20% more to the local suppliers, which in the longer run would affect the customers.

In the month of May this issue was extensively discussed in a meeting attended by Steel users, Traders, lmporters, Agents, Japanese & South Korean trading Giants and other Associations like Wire Manufacturers Association, Tin plate Association, Cold Rolled Steel Manufacturers Association. A press note of this meeting stated, “The (Quality Control)order states, the objective was to control quality of Steel in lndia, but in effect, it will monopolies the business and benefits local Steel mills who will increase the price and the user industry will be hit hard. Ultimately, it is expected that the steel price will go up substantially.”

BIMA (Bombay Iron Merchant Association) in its letter to Narendra Tomar, Union Minister of Steel, also highlighted how current global and national quality compliance mandate are in place and have effectively played vital role in maintaining in good quality of imports. The letter stated, “Quality compliance is most easily achieved by mandating globally accepted and renowned 3^rd party inspection agencies to certify all steels, which the ministry feels relevant, for their quality compliance when entering this country. The Central Boiler Board which is heading the Dept. of Explosives and certifies quality for steel utilized in the most critical application follows this practice from 4 decades. No one has ever complained about the same, not any quality issue raised.”

This order is forecasted to not just affect the cost and quality of the production from the local suppliers, but also affect the international relations in a negative way. More recently, FII (Federation of Industries of India) in its letter to Steel ministry stated, “…the proposed Quality Control Order, 2015, if not withdrawn by the Steel Ministry, would have a massive adverse impact on our international trade relations as no foreign country or their companies, would go for cumbersome BIS registration procedure for the sake of exporting small quantities of steel, occasionally to a few engineering companies in India.”

Further emphasizing on this point, the letter said, “The foreign companies are equally competent to introduce same kind of non-tariff restrictions on export from India. Under such restrictions, how our PM’s ‘Make In India’ programme would become a success here, if other countries stop our exports through similar non-tariff restrictions.”

With steel companies from China are expanding their production overseas due to their merits in quality and effective pricing, merchants also demand government to relook at competency of the Indian suppliers in India was to compete globally.