Ref. No.

SAIL/CD/ED(C)/1/14-15

Date : 27.10.2014

Directorate General of Foreign Trade,

Udyog Bhawan,
H-Wing, Gate No.02,
Maulana Azad Road,
New Delhi-110011

Dear Sir,
We would like to draw your attention to the notification no. 33 (RE-2013)/2009-2014
dated 7.8.2013 of DGFT to be read with notification no. 74 (RE-2013)/2009-2014 dated
13.3.2014 of DGFT. This Notification of DGFT has given exemptedion to Projects
having investment of not less than 1000 crores to as not tofrom complying with Steel &
Quality Control Order provided they are meant for their actual use and are certified by
international standard certifying body quality certifying agency of country of origin,
certifies the product. The Steel & Steel Quality Control Order issued by Ministry of
Steel, in exercise of powers conferred by section 14 of BIS Act 1986, made it mandatory
that certain steel items, as specified vide Order dated 10.09.2012, which has been
amended from time to time, shall be available in domestic market only if they conform
to BIS specifications.
We are unable to appreciate the objective of issuance of such exemptions for big projects
as it is a virtual compromise on quality standards. In this connection we would like to
submit the following:
1) The purposes of mandatory Quality Control Orders are to ensure that there is no
compromise on quality of the product, which is used in domestic market. This is
not meant for other than domestic market and therefore they are not applicable
for exports.
2) In case of domestic market the applicability of Law has to be uniform and same
Law has to be made applicable for Indian and foreign suppliers.
3) Each country has its own standards and there is no uniform system of adherence
to various technical norms, followed by different countries and therefore
suppliers of different countries do not always follow the strict Quality Control
regime as has been specified by BIS for various steel specifications/products.

4) In this connection eExamples of Chinese origin material can be drawn and it has
been found that sub-standard materials of Chinese origins are exported to other
countries including India, which may not exactly match the quality standards of
that country and in the present case the Indian Standards. Such exemption, in
other words gives an advantage to Chinese suppliers vis--vis Indian suppliers
as they are not subjected to BIS standards like all other domestic producers, who
are forced to follow the BIS standards only and do not have exemptions on
similar lines like any other foreign suppliers.
5) Parodoxically Chinese Government have been very strict in terms of use of only
good quality material in their own country and therefore for Reinforcement Bars
which are made with as per the Chinese laid down quality standards have 15%
of Export Tax applicability in addition to levy of 13% of VAT. However, it is
understood that those materials which aresteel produced by those Chinese mills
which do not have not having good process control tend to add a very meager
amount of .0008% of Boron to give it change of nomenclature from Mild Steel to
Alloy Steel thus qualifying for tax rebates in their own country to the extent of
28% as has been mentioned above.
6) However, within the domestic circuit in India these boron added material are
replacing use of BIS certified Mild Steel IS-1786 Reinforcement Bars. In other
words, an alloy steel material is replacing the Mild Steel materials, which do not
have uniform expected properties. One of the Test Certificate which has come to
our notice is attached along with the report of SAIL, R&D Centre, Ranchi. The
Report clearly establishes that the elongation of the material is very low and is
not suitable for use in seismic zone of 3, 4 & 5.
7) It is also all the more important important that projects which are of national
importance large in nature and ore of national importance have implication of
and are meant for public use at large , are not allowed to use and it is therefore it
is imperative that low/inferior quality steel thereby necessisating
implementation of mandatory Quality Control Order. standards are not in public
interest.
8) It is also pertinent to mention that Steel and Steel product Quality Control Order
has been issued for steel products, where as India is having surplus availability.

In view of above, we will iIt is requested you to kindlythat withdraw the

Notification no. 33 (RE-2013)/2009-2014 dated 7.8.2013 be withdrawn urgently
for following reasons:
a) To ensure adherence of good quality standards in India;
b) To give a boost to Make in India campaign of Government of India;
c) To encourage Steel Industry to add capacities with a confidence that Policy
makers would not create such policies which give undesirable advantage to
foreign suppliers as compared to Indian suppliers;
d) Considering surplus steel capacity for all products for which Quality Control
Order has been issued there is no shortage of such material, rather there is a
very competitive pricing within domestic market because existing surplus
capacities for each of the item.
Thanking you,
Yours faithfully,
For STEEL AUTHORITY OF INDIA LIMITED

(ALOK SAHAY)
EXECUTIVE DIRECTOR (COMML.)
Copy to:
Addl. Secretary (Steel), Ministry of Steel, Udyog Bhawan, New Delhi.for kind
information please.
D(C)