Steel Import Monitoring System receives Mixed Reaction from Steel Sector

Indian government is by far taking every required step to protect the domestic steel industry from the influx of cheap and unnecessary imports, at the same time taking care of consumer interest. Two months back i.e. in September, the government launched an online system known as SIMS (Steel Import Monitoring System) to monitor steel imports.

The scheme was introduced at the collective initiative of Ministry of steel and ministry of Commerce and Industry to assess and analyse import and import data for various purposes including to assess imports from FTA and RCEP countries, and also to have a reliable data on steel imports , as whenever there are trade cases relating Anti Dumping or anti- subsidy , even DGTR under Ministry of commerce requires reliable and authentic data , which has always been an issue so far.

Under this system, it has been made compulsory for the importers to register themselves with SIMS to be able to import about 215 iron , steel Scrap and steel products that includes certain flat-rolled products; some stranded wire, ropes, cables; certain items of springs and leaves for springs of iron and steel; tubes, pipes and hollow profiles; diesel-electric locomotives; and some parts of railways, besides Steel scrap.

The importer can apply for registration not earlier than 60th day and not later than 15th day before the expected date of arrival of import consignment. Subsequently SIMS will require importers to submit advance information in an online system for import of these items and obtain an automatic registration number by paying specified amount of fee.

The importer will have to enter the registration number and expiry date of registration in the bill of entry to enable customs to clear consignment. While the SIMS system was earlier supposed to be effective from 1 Nov’19, the government has given one time relaxation and has extended the date to 20 Nov’19 which means that the traders can register themselves under SIMS until 20 November 2019.

Now with this new system coming in, we decided to dug in and interacted with the industry stakeholders in order to take their views on the same. Domestic manufacturers of Steel , Alloy steels , Stainless steel welcome the move. However , the manufacturers in secondary sector are surprised to see Melting Steel Scrap , which is neither steel, but an essential raw material for them , in this list.

The most positive response that we received was from the steel manufacturers as they pitched that the system is going to help them understand the quality, quantity and the price of iron and steel products being imported. The information will help them analyse the grade of steel being imported, if the same is already being manufactured domestically and if not if it can be produced in-house, is the price only factor contributing to its imports, and will also help to solve the issue of under-invoicing and over-invoicing.

Apart from helping the domestic steel manufacturers, the prima facie advantage of SIMS as highlighted by an official from ISA (Indian Steel Association) is that it will help to reduce investigation time required in case of any tariffs imposition as the government will help have the ready data of the steel and related products imports coming in the next few months due to advance registrations.

While having discussion with importers, the feedback that we received is that, with no major changes, SIMS system is set to add to the paper work for them along with minimal registration fees. It has been notified that a registration fee of Rs 1 per thousand subject to a minimum of Rs.500/- and a maximum of Rs 1 Lakh on aggregate CIF value of imports will be required to be paid by the importers.

When inquired about the time restriction for registration of imports in case of imports coming in from nearby countries within a week’s time, the participants said that in that case they will have to maintain inventory (for 7 to 15 days) of such products as registration later than 15 days before the expected date of imports arrival is not allowed. Earlier such importers, maintained inventory for only 3-5 days.

While majority of the industry participants are either happy or okay with the SIMS policy implementation, the move is slammed by the end user industry body which includes EEPC (Engineering Export Promotion Council).

EEPC is particularly against levying registration fees which they are calling as unnecessary. In fact some of the associations , representing secondary sector, like ASPA , have also taken up with the Steel Secreatry and Honourable Steel minister , citing their concerns particularly for inclusion of Scrap and Ferro Alloys , which they strongly feel, should be excluded from the SIMS scheme.

“There is no problem with the import monitoring system and in fact the system will help the domestic steel sector. However, the inclusion of melting scrap under SIMS , which is an essential raw material for small steel producers producing Alloy steels and Stainless steels and which is being imported because of in -sufficient availability from domestic sources, , will call for the levy of registration fees upon its imports , adding to the cost , and thus melting scrap should be removed from the SIMS ”, Dr. Anil Dhawan, Executive Director, ASPA said in its interaction with SteelMint. He also emphasised removal of Ferro Alloys too from list. He also mentioned the minimum period required to apply be changed from 15 days 3 days. Let us see if the government accepts  EEPC and ASPA’s requests  or waits for sometime.

Indian government is making some serious efforts to not only protect the domestic steel sector from imports influx but is also strengthening it. Apart from SIMS, recently the Indian government also decided against joining RCEP (Regional Comprehensive Economic Partnership) – a trade pact that would have allowed free flow of steel from 10 ASEAN nations and four others including China, without any trade restrictions and at Zero basic customs duty.