India relaxes steel import standards

Wed Aug 7, 2013 12:04pm EDT

* Imports for critical projects allowed

* Quality certificates needed from country of origin

By Krishna N Das

NEW DELHI, Aug 7 (Reuters) - India said on Wednesday some steel products can be imported for certain critical applications without local quality certification, a move that could further hit domestic suppliers after imports rose 15 percent last fiscal year.

Imports into India, the world's fourth-largest producer, rose to 7.87 million tonnes, worth $6 billion, in the year ended March 2013 as mills operated below capacity due to a shortage of iron ore. Japan, South Korea and China are the top exporters.

India said imports for projects in sectors such as infrastructure, petroleum, nuclear reactors and defence would be exempted from applicable local quality standards if at least 10 billion rupees is invested in such a project. ($162 million).

The exporters will, however, have to obtain quality certificates from their country of origin, a notification from the commerce and industry ministry said.

"This will help companies like Larsen & Toubro and Reliance Industries import steel specific to their needs, without the supplier having to go through the hassles of getting local certification," said a steel ministry official.

The senior official, who requested anonymity, said that domestic steel companies might oppose the move as a local-certification rule had acted as an indirect trade barrier.

Tata Steel Ltd, JSW Steel Ltd, Jindal Steel & Power Ltd and Essar Steel are the top steel makers in India, Asia's third-largest economy.

"This move will destroy the industry that is already suffering from raw material shortages and higher imports," said D.S. Rawat, secretary general of lobby group ASSOCHAM.

ASSOCHAM will send a letter to Prime Minister Manmohan Singh on Thursday requesting him to reconsider the decision, Rawat told Reuters. ($1 = 61.4475 Indian rupees) (Editing by Keiron Henderson)