Transformer Makers Oppose Steel Ministry's Quality Proposal

NEW DELHI: Electrical transformer manufacturers claim a steel ministry proposed " quality-mandating certification" would impact 60% of India's transformer makers.

India doesn't produce any of the specialised steel used to make power transformers and motors. "India still doesn't produce electrical steel because we lack the technology and it requires a huge investment. In recent years, China has become a big player, having set up several units to make electrical steel," said Rohit Aggarwal, secretary general, All India Lamination & Stamping Manufacturers Association (LASTMA).

According to Aggarwal, this would be another means of global steelmakers controlling the Indian market. Cold Rolled Grain Oriented (CRGO) or the slightly more affordable Cold Rolled Non-Grain Oriented (CRNO) steel are largely imported from about a dozen large international steelmakers, namely Nippon, JFE, ThyssenKrupp and Posco, among others.

The ministry's new quality norms order of March 14, covering nine products, include CRGO and CRNO steel. The new norms require electrical steelmakers to be certified by the Bureau of Indian Standards before September 12, 2012. Ten of them have applied for the certification.

Smaller manufacturers of motors and transformers that are largely used in power distribution feel that while major international players will qualify, their raw material sourced from the same leftover pieces that are acquired by traders will not. Quality concerns for electrical products are already covered by the Bureau of Energy Efficiency Standards.

Dalip Singh, joint secretary in the ministry of steel, said the move was in the larger interest of public safety and to push for better quality steel. Commenting on electrical steel, he said: "68% of the material used in transformers, made in India, is sub-standard. It has led to motors that don't last three months, transformers that burn causing damages of several crores."

However, LASTMA said the move will lead to cartelisation and impact power projects. The association feels that it will encourage import of Chinese-made transformers. "These mills will also get a channel to ship secondary material into India through their steel centres, under the garb of prime material," said Agarwal in a June 19 plea for reconsideration, addressed to the ministry.

The association claimed that electrical steel imports total 2.5 lakh annually, amounting to 6,000 crore at current 130 per kg ($2000/tonne). Of this, only 0.8 lakh tonne is of prime quality. Chinese transformers (765 KV) already hold 40% market share.

Electrical steel was a part of a list in a similar move initiated by the ministry of consumer affairs, introducing quality norms in 2008. Interestingly, it was the ministry of heavy industries, whose units include BHEL, which had opposed the move and had CRGO and CRNO deleted from the list in 2010.