'Waiver for special grade steel procurement only after review'

New Delhi: A high-level panel to address issues pertaining to procurement of domestic steel products has said waivers for special grades not manufactured in the country will be granted only after review.

The government had approved a policy last month for providing preference to domestically manufactured iron and steel products valued at Rs 50 crore or more in government procurement (DMI&SP Policy) under which waivers are granted for procurement of steel which can not be manufactured in the country.

After concerns raised by stakeholders like railways and ONGC, a standing committee was formed, headed by Secretary Steel, which examined various issues that included whether waivers would automatically granted.

"Granting of waivers... shall not be automatic. Standing Committee under Ministry of Steel will review such cases and grant waiver," the Standing Committee said in reply to a clarification sought by the Ministry of Railways whether such waivers would be part of the policy.

The policy mandates to provide preference to domestically manufactured iron and steel products in government procurement in which a minimum value addition of 15 per cent have taken place domestically.

It has provisions for waivers to all such procurements, where specific grades of steel are not manufactured in the country, or the quantities as per the demand of the project cannot be met through domestic sources, as per an official statement. The request of railways that rail as a product should not be included in the list of iron and steel products was also set aside.

To a query from ONGC regarding "inference made from policy that the aggregate procurement in all types of tenders whether direct or as part of EPC project, has to be at least Rs 50 crore for applicability of the policy requires confirmation," the panel said: "Value of iron and steel products should be Rs 50 crore or more... This can be part of a steel intensive project or overall project."

To the Indian Pipe Manufacturers Association (IPMA), which sought to know that "in case of foreign bidder, only coating on pipes domestically should not be considered for the purpose of minimum domestic value addition" the committee clarified that "the bare steel pipe does not fall as input...So process like coating beyond finished iron and steel products can not be counted for value addition."

To a query by the Seamless Tubes Manufacturers' Association of India (STMAI), the panel said, "All kinds of pipes and tubes have been defined as a finished product...of the policy.

Therefore, welded pipes cannot be considered as an input material. Hence, work like fitting/welding Multistart Thread Connectors, which are considered as a highly specialised engineering output, cannot be considered for claiming value addition. The Standing Committee headed by Secretary (Steel) was constituted on June 14, 2017.