Japan has raised a significant issue with the Indian government regarding steel consignments from Japanese suppliers that are being held up at various Indian ports. The Embassy of Japan in India recently submitted an official complaint to two key Indian ministries, the Ministry of Steel and the Ministry of Commerce and Industry, about the prolonged detention of steel shipments. According to the embassy’s letter, the shipments have been blocked due to the absence of a No Objection Certificate from Indian authorities, a document usually granted following Quality Control Committee meetings. However, these meetings have been suspended since September 2024, leaving steel imports from Japan stranded at Indian ports.
The Chargé d’Affaires ad interim at the Japanese embassy, Takashi Ariyoshi, expressed his frustration in the letter, stating that Japanese companies are incurring "huge detention charges" as their shipments remain stuck at customs. This situation has caused severe disruption to business operations, with significant financial implications for Japanese exporters. Despite numerous communications to the Ministry of Steel, no resolution has been found, and Ariyoshi warned that if the issue persists, it could lead to a suspension of steel imports from Japan to India.
This situation has not only affected Japanese exporters but has also raised alarm among Indian steel importers. Many traders in India have voiced similar concerns, noting that steel containers from various countries, including Japan, have been stuck at ports for over two months. These delays are causing substantial losses, especially for smaller businesses that rely on timely shipments of steel. The ongoing hold-ups are part of a broader trend, coinciding with an intensifying lobbying effort from large Indian steel companies, which are pushing for the government to take action against the rising import volumes. These domestic companies argue that the influx of foreign steel is affecting their profitability and market share.
The impact of these delays is felt most acutely by India’s micro, small, and medium enterprises. These businesses, which depend on affordable steel imports, have protested against the imposition of restrictions on foreign steel. They argue that domestic steel prices are often prohibitively high, particularly due to price-fixing practices by some Indian manufacturers, making it difficult for smaller companies to compete. Despite their concerns, there has been pressure from the government to prioritize purchasing steel from domestic producers, with the Ministry of Steel focusing on curbing steel imports as part of broader efforts to protect the interests of the domestic steel industry.
Indian traders have also been raising concerns about the high detention charges and the lack of consistent policies regarding steel imports. Several traders have approached the Department for Promotion of Industry and Internal Trade for assistance, but have yet to receive a response. Importers have argued that many steel products, especially specialized grades of steel, are unavailable in India or are priced far above international standards, making imports essential for businesses to remain competitive. However, the government’s insistence on additional paperwork and clearances has created a bottleneck, further delaying shipments and increasing costs for businesses.
The complications surrounding the No Objection Certificate process have been compounded by the government's Steel Import Monitoring System, which mandates that steel imports be registered with the Bureau of Indian Standards before entry into the country. Experts say that while this system was designed to ensure the quality of steel products entering India, it has become an additional hurdle for importers, particularly when BIS is slow to issue NOCs. Furthermore, there have been technical problems with the SIMS registration system, which has further delayed the clearance process. While the Indian government’s policies to protect domestic steelmakers through quality controls and import restrictions are well-intentioned, they have inadvertently placed a heavy burden on industries that rely on imported steel for their production processes.
In terms of trade data, India’s steel imports have surged significantly in recent years, with imports of core steel products rising from $8.3 billion in fiscal year 2021 to $18.6 billion in fiscal year 2024. This sharp increase has been driven by demand for high-end steel used in industries such as aerospace, defense, and automotive manufacturing. Steel scrap, flat-rolled products, and specialty steels have all seen significant growth in import volumes. However, India’s steel industry continues to face challenges in competing with cheaper foreign steel, leading to a trade deficit in core steel while maintaining a surplus in steel products.
India’s steel trade data from the fiscal year 2024 also highlights the growing divide between core steel imports and exports of finished steel products. Core steel exports in 2024 stood at $11.9 billion, while imports totaled $18.6 billion, showing a significant trade deficit. Meanwhile, steel products exports reached $9.9 billion, surpassing imports of $5.1 billion. This trade imbalance is reflective of the broader challenges facing India's steel sector, where domestic production struggles to meet the demand for specialized steels required in modern manufacturing. The rising trade deficit in core steel, combined with the challenges faced by importers, suggests a growing crisis within India's steel-consuming industries.
The growing pressure on India’s steel imports, compounded by the delays at ports and the heightened lobbying from domestic steel producers, is creating a complex and challenging environment for all stakeholders. Traders and small manufacturers are calling for more consistency in government policies, while large domestic steel companies continue to push for tighter import controls. This ongoing tension between foreign suppliers and domestic producers, coupled with bureaucratic delays, is likely to have far-reaching consequences for India’s steel market in the coming months.
