India's Steel Procurement Policy 2025: Strengthening Domestic Manufacturing

In a significant move to bolster the domestic steel industry, the Indian government has introduced the Domestically Manufactured Iron & Steel Products (DMI&SP) Policy 2025. Effective from April 1, 2025, this policy mandates all government ministries, departments, and agencies to prioritize the procurement of locally manufactured iron and steel products. This initiative aligns with the broader vision of 'Atmanirbhar Bharat' (Self-Reliant India) and aims to reduce dependence on imports while promoting indigenous manufacturing capabilities.PM India+4The Economic Times+4Steel Authority of India+4 Key Features of the DMI&SP Policy 2025 Mandatory Preference for Domestic Products: All government procurement contracts exceeding ₹5 lakh are now required to source iron and steel products manufactured within India. This measure ensures that public sector projects contribute directly to the growth of the domestic steel industry. Value Addition Criteria: The policy stipulates a minimum value addition of 15% for notified steel products to qualify for preferential procurement. This criterion ensures that a significant portion of the manufacturing process occurs domestically, enhancing local industrial capabilities.Steel Authority of India+5EPC World+5PM India+5 Restriction on Global Tenders: To protect domestic manufacturers from foreign competition, the policy prohibits the issuance of Global Tender Enquiries for procurement contracts up to ₹200 crore. Exceptions are permitted only with explicit approval from the Department of Expenditure. Reciprocity Clause: In a move to ensure fair trade practices, the policy bars foreign entities from participating in Indian government tenders if their home countries restrict Indian companies from their procurement processes. This clause aims to establish a level playing field for Indian manufacturers in the global market. Simplification of Technical Requirements: The policy discourages the inclusion of foreign certifications or overly stringent technical specifications in bid documents that could disadvantage local suppliers. This approach is intended to eliminate discriminatory practices against domestic manufacturers. Self-Certification and Accountability: Domestic manufacturers are required to self-certify the local content during bidding. Bidders representing domestic manufacturers must provide authorization certificates, ensuring transparency and accountability in the procurement process. Implications for the Domestic Steel Industry The DMI&SP Policy 2025 is poised to have several positive impacts on the domestic steel industry:EPC World+6Steel Authority of India+6Next IAS+6 Increased Demand for Local Steel: Government projects constitute a significant portion of steel consumption in India. By mandating the use of domestic steel, the policy ensures a steady demand for local manufacturers. Encouragement of Investment: A predictable and supportive policy environment is likely to attract investments in the steel sector, leading to capacity expansion and technological advancements. Job Creation: The anticipated growth in the steel industry is expected to generate employment opportunities across various segments, including manufacturing, logistics, and infrastructure development. Reduction in Trade Deficit: By curbing imports and promoting domestic production, the policy contributes to reducing the trade deficit and conserving foreign exchange reserves. Challenges and Considerations While the DMI&SP Policy 2025 offers numerous benefits, its successful implementation hinges on addressing certain challenges:EPC World+6Steel Authority of India+6Next IAS+6 Capacity Constraints: Domestic manufacturers must scale up production to meet the increased demand from government projects. Quality Standards: Ensuring that domestically produced steel meets the requisite quality standards is crucial for the credibility and success of the policy. Monitoring and Compliance: Establishing robust mechanisms to monitor compliance with the policy provisions is essential to prevent circumvention and ensure transparency. Conclusion The DMI&SP Policy 2025 represents a strategic initiative by the Indian government to strengthen the domestic steel industry, promote self-reliance, and stimulate economic growth. By mandating the use of locally manufactured steel in government procurement, the policy not only supports domestic manufacturers but also aligns with the broader vision of an 'Atmanirbhar Bharat' (Self-Reliant India). Effective implementation and continuous evaluation of the policy will be key to realizing its intended objectives and fostering a resilient and competitive steel sector in India. SOURCES: https://economictimes.indiatimes.com/industry/indl-goods/svs/steel/centre-extends-procurement-preference-for-locally-made-steel-by-six-months/articleshow/108306575.cms https://www.epcworld.in/p/post/domestically-manufactured-iron-steel-products-to-be-preferred-in-government-procurement https://steel.gov.in/en/policies/policy-providing-preference-domestically-manufactured-iron-and-steel-product-govt https://www.nextias.com/ca/current-affairs/03-04-2025/domestically-manufactured-iron-steel-products-policy-2025