Utensil makers oppose quality norms on steel

Business Economy Finance
(Last Updated On: July 8, 2016)

Manufacturers and exporters of stainless steel utensils and cutlery are opposing the recent curbs imposed on the import of different types of so-called ‘substandard’ stainless steel, arguing that the move will result in a shortage of raw material and push up costs for the sector. The quality-control order prohibits manufacture, storage, sale and distribution of stainless steel products that do not conform to the standards specified in that order and which do not bear the ‘Bureau of Indian Standards (BIS)’ mark (given after obtaining a licence from the BIS). The move is also aimed to prevent ‘poor quality’ steel imports from countries, including China.

Manufacturers and exporters said the order will deprive them of their raw materials and increase costs of production. This, they warned, could in turn lead to closure of several firms in the sector due to non-viability of operations, thereby causing large-scale unemployment. Stainless steel utensils and cutlery, according to All India Stainless Steel Industries Association (AISSIA), is an industry worth approximately Rs.26,000 crore, employing over a million workers and exporting products worth about Rs.2,000 crore.

Canard

AISSIA has sent a written complaint in this regard to Prime Minister Narendra Modi, Commerce Minister Nirmala Sitharaman and the BIS. The organisation claimed that the quality control order was an “indirect attempt to stifle much-needed imports (of stainless steel).” It said the allegation — that imported stainless steel was ‘substandard’ — was a canard being spread by prominent Indian manufacturers of primary stainless steel coil to ‘convince’ the government to impose such non-tariff measures to curb imports, so that “they (Indian primary steel manufacturers) can hide their inefficiencies and enrich themselves by selling their products (or raw materials for the stainless steel user industry) at premium prices.”

The quality control order was imposed over and above the minimum import price (MIP) ranging from $341 to $752 per tonne on 173 steel products to protect local steel manufacturers from a surge in cheap imports of steel.

The MIP, which was imposed on February 5 is in place at least until August 4. In March, the government had also extended the safeguard duty (of 20 per cent that will gradually drop to 10 per cent) on steel imports till March 2018.

In separate meetings on July 5 with the ministries of commerce and steel, representatives of AISSIA — an organisation of over 5,000 stainless steel utensils and cutlery manufacturers and exporters — alleged that the quality control order was imposed without finding out if there were cases regarding stainless steel utensils & cutlery causing health hazards. According to AISSIA some of the ‘high’ standards specified in the quality control order were not even required under international norms.

Cost increase

The quality control order will only benefit some primary stainless steel coil manufacturers who have facilities to switch over to manufacturing of different grades of steel, according to the AISSA.

Demanding that stainless steel utensil and cutlery manufacturers should have the freedom to use the relevant grade of stainless steel to base their production on the type of demand, the AISSA said if they were forced to use only the grades specified in the (quality control) order, it would lead to a minimum cost increase of 30 per cent and would make stainless steel utensils unaffordable for Indian consumers.

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