India has tightened the rules on what can qualify as domestically manufactured steel in government procurement. The Ministry of Steel has replaced the earlier 50% domestic value addition requirement with a stricter “Melt & Pour” condition for several steel product categories. The change means that simply processing imported steel in India will no longer be enough for these products to qualify under the domestic procurement policy.
What has changed
The change applies to products covered under HS codes 7301, 7302, 7303 and 7308–7326. These include items such as railway material, steel structures, tanks, containers, wire products, fasteners and several fabricated steel products. Earlier, the focus was largely on how much value was added in India. Under the new requirement, the steel must be melted and cast into its first solid form in India, while the final product must also be manufactured in the country. This makes the origin of the steel itself much more important than before.
Why the government has made the change
The DMI&SP policy has been in place since 2017 and is meant to give preference to domestically manufactured iron and steel in government procurement. The policy covers government departments, agencies and projects funded by them, with the broader objective of supporting India's domestic steelmaking capacity. The latest move takes that idea a step further. A product cannot simply be imported in a semi-finished or finished form, processed in India and then be treated in the same way as steel that was actually made domestically. For Indian steel producers, that could create a clearer advantage in government-funded projects.
What it could mean for steelmakers
The immediate impact is likely to be seen in government tenders rather than the entire steel market. The new rule does not amount to a blanket ban on imported steel for private-sector buyers. Its direct effect is on procurement covered by the DMI&SP framework.
For domestic mills, however, the change could improve access to a sizeable pool of government-linked demand. Infrastructure, railways and other public projects use large quantities of steel products, so the ability to meet the new origin requirement could become an important factor when companies compete for these orders.
Imported steel could face a tougher route
The biggest change is for companies that depend on imported steel and then carry out further processing in India. Under the old value-addition approach, there was more room for such products to qualify if sufficient value was added locally.
The new Melt & Pour requirement makes that route more difficult. If the steel itself was not melted and cast in India, simply carrying out further fabrication or processing may not be enough for the product to qualify under the specified categories.
The bigger picture
India has been trying to build a stronger domestic steel supply chain and reduce dependence on imported steel products. The government has also been using measures such as the Specialty Steel PLI scheme to encourage investment in higher-value steel production and reduce imports.
For steelmakers, the latest amendment is therefore another policy measure that supports domestic production. The real impact will depend on how government tenders respond and how easily domestic producers can meet the required grades, specifications and volumes.
For now, the message is fairly straightforward: for several steel products used in government procurement, being processed in India is no longer enough. The steel itself needs to have an Indian origin from the melting and casting stage.
Disclaimer: This article is for information and market discussion purposes only. It is based on publicly available information and should not be considered investment or trading advice.