A regulatory change by the Ministry of Steel has sparked alarm among India’s micro, small and medium enterprises (MSMEs), with the Global Trade Research Initiative (GTRI) warning of potential supply chain disruptions and heavy compliance costs that could lead to widespread factory shutdowns. According to a report by GTRI, the rule—issued on June 13—mandates that raw materials used in the manufacture of finished or semi-finished steel products must now comply with Indian Standards (IS) and be registered on the Steel Import Monitoring System (SIMS). The requirement applies to all products covered under India’s Quality Control Orders (QCOs), expanding the compliance burden significantly for importers. Earlier, foreign suppliers only needed BIS certification for finished steel products destined for India. Under the new rule, upstream materials like billets, slabs and hot-rolled coils must also be BIS-certified—even if they’re used by a third country to manufacture finished steel products for Indian buyers. “This abrupt change could disrupt supply chains and impose heavy compliance costs on MSMEs reliant on imported semi-finished steel,” GTRI said as quoted ANI. It added that the rule has triggered “panic” in the sector, which fears large-scale losses and plant closures due to the lack of transition time. The report pointed out that many importers had already paid advances for steel shipments due to arrive between June and August. These contracts, signed months in advance, now face the risk of being deemed non-compliant due to the new traceability requirement. To illustrate the complexity, GTRI cited an example: if a Malaysian company supplies steel slabs to a Vietnamese manufacturer, which then converts them into steel sheets for India, both entities must now be BIS-certified. This multi-stage requirement, GTRI warns, creates serious obstacles for global supply chains. Further complicating matters is the apparent exemption granted to finished products such as welded pipes, which are not subject to the same traceability clause. GTRI questioned the need for additional raw material compliance when BIS already certifies finished products after physical inspections at foreign factories. “BIS certification for upstream suppliers can take six to nine months. Yet the Ministry has enforced the new traceability requirement with only three days’ notice and no stakeholder consultation,” it said. The think tank has urged the government to reconsider the move, warning that without an extension or relief, the regulation could push many MSMEs into financial distress and lead to a wave of factory closures.