Steel Ministry Tightens Domestic Steel Procurement Norms with ‘Melt-and-Pour’ Mandate

The Ministry of Steel has strengthened India’s domestic procurement framework by introducing a “melt-and-pour” requirement under the Domestically Manufactured Iron & Steel Products (DMI&SP) Policy, aimed at ensuring that steel supplied for government procurement is manufactured entirely within India. The revised requirement notified vide G.S.R. 720(E) dated August 7, 2026, substitutes the earlier “50% Domestic Value Addition” condition with “Melt & Pour” for a wide range of iron and steel products and represents a further tightening of localization requirements. It is expected to have implications for infrastructure projects, EPC contractors, lenders and project-financing structures.

Under the new requirement, specified steel products must undergo the initial melting and pouring of crude steel in India, rather than merely meeting domestic value-addition requirements through downstream processing. The mandate covers several categories, including flat-rolled products of iron or non-alloy steel, bars and rods, hot-rolled products in irregularly wound coils, electrical steel and other specified iron and steel products.

The move is intended to prevent suppliers from importing steel or semi-finished material and subsequently supplying it to government projects after domestic processing. By establishing the origin of the steel at the melting stage, the government is seeking to close potential avenues for circumvention of import restrictions and strengthen the domestic steel manufacturing ecosystem. 

The revised procurement framework is particularly relevant for infrastructure and capital-intensive projects, where steel constitutes a significant component of construction and equipment costs. Infrastructure and construction accounted for approximately 68% of India’s steel consumption in FY 2023-24, underscoring the potential significance of changes in domestic steel procurement requirements for project costs and execution.

For EPC contractors and project developers, the mandate could require greater scrutiny of procurement arrangements, vendor eligibility and supply-chain documentation. Projects dependent on imported steel or specialized grades may face additional procurement constraints where equivalent domestic products are unavailable or have longer lead times. The policy may benefit domestic steel manufacturers, as government procurement shifts further towards steel produced within India. However, industry participants have cautioned that micro, small and medium enterprise suppliers could face margin pressure because of increased demand for domestic steel and restrictions on imported material.

The DMI&SP framework also provides a 20% purchase preference to domestic suppliers of capital goods used in steel manufacturing and applies to contracts exceeding ₹5 lakh for specified iron and steel products. In addition, Global Tender Enquiries for iron, steel and related capital goods procurements up to ₹200 crore are restricted without the requisite approvals.

Most products covered by the revised framework are now subject to domestic sourcing requirements. Certain products, including railway coaches, wagons, locomotive parts, steel tubes and pipes, continue to operate under a 50% Domestic Value Addition requirement rather than the new melt-and-pour standard. The continued exemption has reportedly prompted calls from seamless-pipe manufacturers for the stricter requirement to be extended to their products. 

The introduction of the melt-and-pour requirement marks a shift from domestic value addition towards end-to-end domestic steel production. For infrastructure developers, EPC contractors, investors and lenders, the key considerations will be the availability, pricing and certification of compliant domestic steel during project execution.