Steel Ministry mandates melt and pour to tighten domestic procurement policy

The Steel Ministry has introduced melt-and-pour clause in the Domestically Manufactured Iron & Steel Products Policy. This tightens the regime to ensure local procurement by suppliers to government tenders. A notification dated earlier this month mandated melt-and-pour in flat-rolled products of iron or non-alloy steel, bars and rods, hot-rolled, in irregularly wound coils, of iron or non-alloy steel, and electrical steel and other articles of iron or steel among others.

A melt and pour mandate ensures the steel being supplied is compliant with an incentives programme under which it is being procured. The guardrail can specify countries of origin to prevent circumventing import barriers.

Sector watchers say this is beneficial for domestic steel makers who stand to gain significantly from the tighter localisation mandate. Micro, small, and medium enterprise suppliers may face constrained margins due to higher demand for local steel and curbs on imports.


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“The melt and pour mandate will curb instances of importing steel by traders and then selling it to suppliers in government procurement,” a steel industry representative told ET.

A 20% purchase preference is granted to domestic suppliers of capital goods used in steel manufacturing under the Domestically Manufactured Iron & Steel Products Policy. It applies to contracts exceeding Rs 5 lakh for iron and steel products. Further, Global Tender Enquiries are barred up to Rs 200 crore for iron, steel, and capital goods procurements without requisite approvals.

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Under the revised mandate in force from August 7, most steel products in the list of iron and steel products which can only be procured from domestic sources. Railway coaches, wagons, parts of locomotives, and steel tubes and pipes are among the commodities that continue to be governed under the 50% Domestic Value Addition mandate.

This exemption has irked seamless pipes manufacturers that seek the melt and pour mandate extended to their products as well.