Steel Traceability Rule Sparks Industry Panic, MSMEs Warn of Shutdowns: GTRI

India’s latest steel import regulation has triggered a widespread panic among importers and manufacturers, particularly MSMEs. The new rule mandates that not only the finished or semi-finished steel products imported into India but also the raw materials used to manufacture them must now comply with Indian Standards set by the Bureau of Indian Standards. The order applies to all shipments with a bill of lading dated June 16 or later, effectively giving businesses just one working day to comply.

According to the Global Trade Research Initiative, the sudden expansion of India’s Quality Control regime could have far-reaching effects on industrial operations, particularly for small and mid-sized enterprises that rely heavily on imported semi-finished steel. 

“This is a regulatory ambush,” GTRI quoted a Jaipur-based stainless steel pipe manufacturer as saying. “We paid crores for BIS-certified cold-rolled coils. Now we are being penalised because the upstream hot-rolled input coils used in their production are not separately BIS-certified.”

The GTRI report notes that under the new rule, a foreign steel exporter who is already BIS-certified can no longer ship finished steel to India unless the raw material used—such as slabs, billets, or hot-rolled coils—is also BIS-certified. 

Industry bodies argue that the abrupt implementation is impractical. Importers must first alert their suppliers, who must in turn persuade upstream suppliers—often in different countries—to seek BIS certification. As GTRI points out, BIS certification can take six to nine months, making compliance within a day impossible. The order’s announcement was only made public on 16 June via email and the SIMS portal, even though it was dated 13 June.

The timing has added to the sense of chaos, it said. Many importers had already signed contracts months ago and paid advances for steel shipments expected to arrive between June and August. These are now at risk of being declared non-compliant, potentially leading to crores in losses. “This creates legal, logistical, and financial nightmares for MSMEs,” said GTRI. “The short notice gives no meaningful window to adapt.”

Adding to industry concerns is the perception of discriminatory enforcement, GTRI said. Finished goods such as welded pipes are reportedly exempt from the new traceability rules, creating what critics call a loophole that favours the import of high-value finished goods over raw materials. “This makes it easier to import the final product than to manufacture it in India,” a trade analyst told GTRI. “It completely undermines the goals of Make in India.”

The GTRI report concludes that if the government’s intent is to stop such imports, it should do so transparently, rather than creating opaque rules that selectively exclude smaller players. “A central policy that creates compliance barriers without adequate preparation or consultation not only disrupts industry but also erodes the credibility of India’s regulatory processes,” it said.