India Tightens Steel Procurement Policy to Boost Domestic Industry

In a move aimed at strengthening India’s domestic manufacturing sector, the Indian government has announced a revised steel procurement policy mandating that all public sector undertakings (PSUs), ministries, and government departments prioritize locally manufactured steel products. The new guidelines, issued by the Ministry of Steel, are designed to curb low-priced imports and support local steelmakers amid rising global competition and market volatility.

The directive, which comes into immediate effect, aligns with the government’s Atmanirbhar Bharat (Self-Reliant India) initiative and will impact procurement across infrastructure, construction, railways, defense, and energy projects.

Under the updated policy:

• Only domestically produced steel is to be used for government-funded projects.
• Exceptions will be granted only in cases where domestically produced steel is not available or does not meet quality standards.
• A Digital Monitoring System will track procurement and usage of steel to ensure compliance.

Union Steel Minister Jyotiraditya Scindia emphasized the importance of the policy, stating, “India’s steel sector is one of the pillars of our industrial growth. By prioritizing domestic production, we are not just supporting our manufacturers but also reducing dependence on imports that hurt pricing and capacity utilization.”

Global and Industry Impact

India is the second-largest steel producer in the world, but has seen increasing pressure from cheaper imports, especially from countries like China, South Korea, and Vietnam. The new policy is expected to reduce import volumes, enhance capacity utilization at local plants, and stabilize prices in the domestic market.

Industry experts have largely welcomed the move. According to the Indian Steel Association, this decision could lead to a 5–8% increase in domestic steel demand over the next fiscal year.

However, some concerns have been raised regarding the availability of specialized grades of steel that are not widely manufactured in India. Government officials have assured that “case-by-case exemptions” will be considered to avoid disruption to critical projects.

Economic Outlook

The steel sector plays a vital role in India’s economic framework, contributing over 2% to the country’s GDP and providing direct and indirect employment to over 2.5 million people. The tightened procurement policy is expected to:

• * Increase domestic plant utilization
• * Strengthen employment in the sector
• * Encourage new investments in specialized steel manufacturing

Conclusion

India’s decision to tighten steel procurement rules is being seen as a strategic policy intervention to protect and grow the domestic steel ecosystem. As global trade dynamics shift, this move signals India’s intent to not only shield local industry from volatility but also position itself as a robust manufacturing hub.