PHD Chamber urges Indian government to defer Steel and Steel Products Quality Control Order

Canned food market predicted to increase

Keeping in mind the demand-supply gap of tinplate/tin free steel products such as Easy Open End (EOE)/Peel off/Cone/Domes etc in India, materials should be allowed to be used which are aligned to International Standard Organisation (ISO), according to Shri Sanjay Aggarwal, president, PHD Chamber of Commerce and Industry, who expressed this in a press statement issued on 30 December 2020.

Aggarwal said that the Steel and Steel Products Quality Control Order (QCO) dated 17 July 2020 will restrict the supply of input materials to crucial industries such as the tin can making industry, metal packaging industry and processed food industry which is not in the wider interest of the nation, considering the food loss is already up to 30% in the country.

Processed food industry is one of the thrust sectors of the Government and tin containers are essential packaging material for the industry.

“We urge the Government to defer the Steel and Steel Products (Quality Control Order dated 17 July 2020) issued by Ministry of Steel, Government of India,” said Shri Sanjay Aggarwal.

Total demand of tinplate/tin free steel in India is reportedly around 6,50,000 tonnes (70% prime material and 30% non-prime material), while the domestic availability is close to 4,00,000 tonnes, therefore the gap in demand and supply is met through imports.

Various categories of tinplate/tin free steel currently not produced in India include thinner gauges, width more than 1000mm, narrow width coil, etc.

Quality control orders of similar kind have been introduced earlier (2008, 2015 and 2017) but the same were withdrawn considering the practical difficulties in implementation of such orders and that industry essentially requires both prime and non-prime materials, said Aggarwal.

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.

Aggarwal stated that due to the unprecedented situation imposed by the spread of pandemic Covid-19 with ban on international travel as well as fear in the minds of people, the foreign Tinplate Mills are unlikely to get the relevant BIS Licences, rendering the proposal to implement the QCO after around nine months not feasible.

“Furthermore, the cost for getting such licences and the fees payable to BIS would potentially be included in the selling price being charged from the businesses, thereby, raising their landed prices and requirement of more funds at a time when trade and industry is already struggling to reset their wheels and is facing liquidity constraints,” Aggarwal added.

Prosperity of businesses facilitate creation of jobs and generation of incomes which improves the country’s position in socioeconomic and business rankings in global charts. Thus, said Aggarwal. it becomes important to further reduce the cost of doing business in India and attract significant foreign investments and achieve the goal set by Hon’ble Prime Minister, Shri Narendra Modi ji of a USD $5 trillion economy by 2024-25.

According to Aggarwal, the QCO mandates that the consignment shall be accompanied with the test certificate carrying BIS licence number of the input material and is essentially against the spirit of ease of doing business and will unnecessarily increase the paper work and the cost of compliance.

Non-prime material is essentially required by the industry for non-critical non-edible products, therefore Aggarwal states that 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.

Proposals in the QCO will restrict imports of Tinplate/Tin free steel products such as Easy Open End (EOE)/Peel off/Cone/Domes etc, as they are not sufficiently manufactured in the country and are essentially required since they are used for consumer convenience and generally accepted in the market, he said.

“At this juncture, we recommend to hold the implementation of the said QCO order as it would severely affect a large number of small can makers/product manufacturers in MSMEs sector and result in job losses and revenue to the Government.”

Aggarwal believes that extension of the implementation of QCO order should be given till March 2022 (currently till 17 April 2021) to extend support to crucial industries. “We deeply appreciate the vision of the Hon’ble Prime Minister for AatmaNirbhar Bharat (Self-Reliant India) and the motto of “Being Vocal to promote Local and become Global” to encourage self-reliance and local production in the country.

“Going forward, the government should set up a Development Fund to provide soft loans to the metal container industry for harnessing local capabilities to produce such components in the country and promote “Make in India” and “AatmaNirbhar Bharat””.

The Development Fund would not only help in boosting indigenous production but also improve the competitiveness of our businesses and encourage greater exports from India, said Shri Aggarwal.

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