Steel, QCOs and BIS: MSMEs Caught in the Crossfire

In a significant legal and industrial development, the Union Ministry of Steel has moved the Supreme Court to challenge a stay issued by the Madras High Court on its recent directive imposing import restrictions on sub-standard steel inputs. The 13 June notification by the ministry extended the scope of mandatory Bureau of Indian Standards (BIS) certification to include not only finished steel products but also critical raw materials such as stainless steel slabs, hot rolled, and cold rolled coils. This was intended to uphold safety and quality standards in domestic manufacturing and align with the government’s broader vision of strengthening the ‘Make in India’ initiative.

However, the move sparked widespread concern across India’s MSMEs in the steel sector. Many of these businesses rely on low-cost imported inputs to maintain competitiveness and production viability. Industry bodies and MSME representatives highlighted the likely disruptions to supply chains and significant cost escalation due to the BIS certification requirements. Acknowledging this, the government temporarily suspended the mandate until 15 July to allow further stakeholder consultations. Despite the interim relief, an MSME steel producer approached the Madras High Court, which on 13 July granted a stay on the notification’s implementation. The Steel Ministry’s special leave petition now seeks to reinstate the regulations, arguing they are crucial for long-term quality assurance and industrial self-reliance.

This case underscores a broader challenge MSMEs face across sectors due to the rollout of mandatory Quality Control Orders (QCOs) by BIS. While aimed at curbing substandard imports and improving product standards, QCOs have imposed a disproportionate compliance burden on MSMEs, which contribute around 30% to India’s GDP, 45% to manufacturing output, and nearly 48% to exports.

MSMEs struggle with high compliance costs, with BIS certification for each product line costing ₹1–2 lakh. Dual compliance burdens—covering both imported inputs and final products—further escalate operational complexities. Customs delays on uncertified imports disrupt production schedules, while the limited number of BIS-accredited labs, especially outside urban hubs, leads to logistical bottlenecks and cost overruns. The certification process itself is lengthy and bureaucratic, often confusing for small enterprises lacking regulatory expertise or administrative bandwidth.

Moreover, enforcement of QCOs remains uneven, with compliant firms subjected to inspections while non-compliant ones often operate undisturbed. Regulatory gaps—such as lighter scrutiny on fully assembled imported goods compared to individual components—further disadvantage MSMEs striving to stay within the law.

To address these issues, there is a pressing need to tailor QCO frameworks to MSMEs, grant longer transition periods, and build sector-specific awareness and support systems. Recognition of globally accepted certifications like CE or UL, expanded testing infrastructure, and digitalised, transparent certification processes would go a long way in easing the burden. If implemented thoughtfully, these measures can ensure quality without stifling India’s vital MSME sector, paving the way for inclusive and sustainable industrial growth.