PHD Chamber urges Steel Ministry to defer QCO order

On 17 July 2020, The Steel and Steel Products Quality Control Order (QCO) restricted the supply of input materials to crucial industries such as tin can making industry, metal packaging industry and processed food industry. The processed food industry is one of the thrust sectors of the Government - and tin containers are essential packaging material for the industry. The sector is vital when one considers that food loss in India is already up to 30%.

Sanjay Aggarwal, the president of the PHD Chamber has urged the Government "to defer the Steel and Steel Products (Quality Control Order dated 17 July 2020) issued by the Ministry of Steel" Readers of WhatPackaging? magazine will recall that a similar QCO was introduced earlier (in the years 2008, 2015, 2017) but these were withdrawn.  This was because of "the practical difficulties in implementation of such orders and that industry essentially requires both prime and non-prime materials," said Aggarwal.

To understand the crux of the problem, the total demand of tinplate / tin free steel in India is 6,50,000 tonnes (70% prime material; 30% non-prime material) while the domestic availability is 4,00,000 tonnes, therefore, the gap in demand and supply is met through imports. Categories of tinplate / tin free steel not produced in India include thinner gauges, width more than 1000mm, narrow width coil, etc. Due to the proposals in the QCO, it will restrict imports of tinplate / tin free steel products which are not manufactured (sufficiently) in India.

As per the QCO, foreign suppliers are required to take Bureau of Indian Standards (BIS) licence in order to supply to India and will be effective six months (extended by another three months now) from the date of publication.

Sanjay Aggarwal said, "The QCO mandates that the consignment shall be accompanied with the test certificate carrying BIS licence number of the input material and is against the spirit of ease of doing business. Also it will unnecessarily increase the paperwork and the cost of compliance."

"Due to the unprecedented situation imposed by the pandemic, plus the ban on international travel as well as fear in the minds of people, the foreign tinplate mills are unlikely to procure the relevant BIS licences. This will render the proposal to implement the QCO after nine months as not feasible, said Aggarwal.

Non-prime material is essentially required by the Industry for non-critical non-edible products, therefore any move to ban imports of such material will result in significant loss of job opportunities especially in the Micro, Small & Medium Enterprises (MSMEs) sector as well as lead to increase in defaults to banks, said Sanjay Aggarwal.

He added, "Proposals in the QCO will restrict imports of tinplate/tin free steel products as they are not sufficiently manufactured in India. But they are required since they are used for consumer convenience and accepted in the market.

The press note issued by the PHD Chamber of Commerce and Industry hoped that the extension of the implementation of QCO order should be given till March 2022 (currently 17 April 2021) to extend support to crucial industries such as the tin can making industry, metal packaging industry and processed food industry.
 

Do read Abhishek Muralidharan's story: https://bit.ly/3oY9PhR