FCC

India imposes Quality Control Measures on metal sales from Dec 2023

2023-09-06

Starting from December 2023, India has imposed restrictions on the sale of low-quality aluminium, copper, and nickel, and this directive has been implemented through Quality Control (QC) orders issued by the Ministry of Mines.

Back in June of this year, Mines Ministry was planning to introduce a Quality Control regime to discourage the influx of substandard imports. This initiative aims to bring regulation to the sale of these metals, mandating that sellers adhere to the standards set by the Bureau of Indian Standards (BIS).

In March of the same year, the central government had proposed the issuance of Quality Control orders for aluminium, copper, and nickel. Draft orders pertaining to aluminium alloys and these metals were made public, and public input was solicited until the end of May.

It is worth noting that copper, which constitutes approximately half of India's demand for the metal, heavily relies on imports, while the entire nickel requirement for the country is met through overseas sources. Furthermore, India currently imports more than 40% of its aluminium consumption in the form of alloy scrap.

Jayanta Roy, Senior Vice President at ICRA Limited, commented on the situation, stating, "The proposed quality control order will lead to the elimination of sub-standard material imports, if any, which can potentially lead to a shortage of raw material for downstream producers, resulting in a hardening of product prices in the domestic market in the near term."

Observers of the sector anticipate that the initial months following the implementation of a quality control order typically result in supply disruptions and the formation of price cartels among companies that possess QC certification. As this order encompasses the sale of these metals, it is expected to curb the influx of counterfeit imports through rigorous quality control measures.