Delayed Licence Renewal Leads to Shortage of Specialty Steel in Power Sector

Chennai: India’s power sector is facing a crisis due to a shortage of specialty steel used for electric motors and transformers. Delayed renewal of BIS licenses of several foreign suppliers has created a scarcity of the import-dependent metal.

The sector is facing a 30 per cent shortage of Cold-Rolled Grain-Oriented (CRGO) steel essential in the production of electric motors and transformers. With domestic production meeting only about 10-12 per cent of demand, India relies heavily on imports, said Ajay Srivastava, founder of GTRI.

The shortage has been caused by the import uncertainty emerging from the delayed license renewals by the Bureau of Indian Standards (BIS) for many foreign suppliers from Japan, South Korea, and China. Foreign suppliers require BIS certification under a Quality Control Order. Some of the licences have already expired and many are set to expire soon. While the renewal does not have a definite time frame, the process of finalising order and importing can take 45 days to two-and-half months.

In FY24, India, one of the largest consumers of CRGO steel, required around 4 lakh tonnes. With only 50,000 tonnes produced domestically, it had to import over 2.39 lakh tonnes from countries like China, Japan, Russia, and South Korea. After exporting 11,400 tonnes, only 2.77 lakh tonnes were available for local use, leaving a shortfall of 1.22 lakh tonnes, or 30.6 per cent of total demand.

According to GTRI, the Bureau of Indian Standards (BIS) should expedite its approval process for CRGO imports to prevent license expirations and ensure a steady supply.

Further, BIS should expand the list of approved CRGO grades and suppliers to support smaller manufacturers and MSMEs, who are the most vulnerable to these shortages.

The government should also allow zero-duty imports of raw materials for CRGO production and develop local CRGO manufacturing capacity, India would benefit from partnerships with global leaders.