New Delhi, India
India’s steel procurement policy is becoming more tightly linked to domestic manufacturing depth. The Ministry of Steel has strengthened the “melt and pour” requirement under its Domestically Manufactured Iron & Steel Products (DMI&SP) policy, first notified in 2017, revised on May 26, 2025, and sharpened further in a December 17, 2025, notification that explicitly designates India as the country where covered steel must be melted and cast, closing a geographic ambiguity that existed in earlier versions. The rule means qualifying steel can no longer just be processed in India; it has to originate from the melting stage itself.
At first glance, this reads as a policy for steelmakers. Its effects reach considerably further, because steel isn’t the end product; it’s an input into construction, infrastructure, engineering, automotive, energy, defence and capital equipment. That makes this fundamentally a supply-chain story, not just a steel story.
A Much Lower Bar for Coverage
One detail matters more than it might first appear: the policy now applies to government contracts above just ₹5 lakh, a dramatic drop from the ₹50 crore threshold set in the original 2017 policy. That shift pulls a far larger number of smaller government contracts, the kind MSMEs and regional fabricators actually compete for, into scope, rather than limiting the rule’s reach to only the largest infrastructure tenders. Global tender enquiries are also barred outright up to ₹200 crore without specific Department of Expenditure approval, effectively closing off international bidding for a wide swath of mid-sized government steel procurement.
Not Every Product Faces the Same Bar
An important nuance often missed in early coverage: the strict melt-and-pour requirement applies specifically to primary steel products under HS Chapter 72, flat-rolled steel, rods, bars, rails and similar raw and semi-finished forms. Downstream, fabricated products like pipes, tubes, structures and containers (covered under Chapters 73 and 86) face a different, somewhat more flexible standard, a minimum domestic value-addition threshold instead of the full origin requirement. That distinction is relevant for manufacturers: a fabricator working with imported primary steel that undergoes substantial domestic processing may still qualify, while a supplier of raw structural steel has no such flexibility. Understanding which category a product falls into is now a genuine compliance question, not a formality.
The policy retains waivers where specific grades aren’t manufactured domestically or available quantities fall short, an acknowledgement that restricting imports alone can’t manufacture domestic capacity into existence overnight.
Manufacturing Insight: This Policy Is a Demand-Side Policy Paired With a Supply-Side One
What makes this moment different from earlier iterations of DMI&SP is that it isn’t operating alone. In February 2026, the Ministry of Steel signed MoUs for 85 projects worth over ₹11,000 crore under the third round of its Production-Linked Incentive scheme (PLI 1.2), specifically aimed at building domestic capacity in speciality and advanced steel grades. Put together, the two policies form a matched pair: melt-and-pour tightens demand-side preference for domestic steel in government procurement, while PLI 1.2 funds the supply-side capacity needed to actually meet that demand in higher-grade categories. That pairing is significant because a procurement preference without matching capacity investment typically just creates bottlenecks and waiver requests. India appears to be trying to build both sides simultaneously rather than assuming demand alone will call capacity into existence.
There’s also a reciprocity dimension worth noting: countries that restrict Indian firms from their own public procurement, a provision widely understood to target China specifically, are denied access to Indian government tenders under this policy, adding a trade-policy layer beyond pure domestic manufacturing promotion.
The Ripple Effect
The compliance burden this creates cascades well beyond steel mills themselves. Steel service centres and processors now need documented, batch-level traceability proving where material was melted, not just where it was cut or shaped, a genuinely new record-keeping requirement for many mid-sized players. Fabricators and EPC contractors competing for government-linked infrastructure work will increasingly need to demonstrate compliant sourcing as a bid qualification, on top of price and technical capability. Testing and certification bodies gain a growing role in verifying the origin of claims and calculating value addition, particularly for the fabricated-product category with its separate threshold. Speciality and alloy steel producers targeted by PLI 1.2 have a clearer, more predictable government-linked demand signal to justify the capacity investment the scheme is funding. MSME suppliers, newly pulled into scope by the lowered ₹5 lakh threshold, face both a bigger opportunity and a steeper compliance bar than before; those who can build reliable domestic-sourcing documentation stand to gain real preference over lower-cost competitors who can’t.
The Bigger Picture
The real test of this policy won’t be measured in tonnes of steel produced under it. It will be measured in how much of the surrounding supply chain, processors, fabricators, testing labs, and the MSMEs threading through all of them can actually build the traceability, documentation and quality systems the rule now demands. Steel sourcing in India is no longer just a procurement decision. It’s becoming a compliance discipline in its own right, and that shift will likely matter more to manufacturers than the headline policy change itself.
The newly approved projects span 10 states and are expected to generate production worth ₹82,243 crore and create close to 10,000 jobs. The ₹7,877 crore figure includes ₹6,844 crore across the 31 new project proposals, plus a ₹1,033 crore capacity expansion approved for existing beneficiary Wipro Global, which had earlier been cleared for copper-clad laminate manufacturing.
What’s Being Manufactured
Krishnan said the latest approvals cover a broad range of components, including capital goods, camera and display modules, anode materials, enclosures, connectors, transducers, rare-earth permanent magnets, optical transceivers, speakers and microphones, relays, hermetic terminals, electrolyte additives, antennas, metallised films for capacitors, coils, filters, capacitors and metal shielding covers. Capital goods led the latest allocation, with five approved applications accounting for ₹1,451 crore of the total.
With this round, the government has now cleared 106 applications covering around 30 product categories across 15 states over the scheme’s lifetime.
Scheme Has Exceeded Its Original Targets
The cumulative figures show the ECMS running well ahead of its initial goals. Total approved investment under the scheme has reached ₹69,548 crore, above the scheme’s original target of ₹59,350 crore. Projected production from approved projects now stands at ₹534,101 crore, compared with an original target of ₹456,500 crore. Employment generation, however, remains below target; the scheme has created 74,628 jobs against a target of 91,600 so far, though Krishnan said the government expects to close that gap shortly.
The ECMS was notified in April 2025 with an initial outlay of ₹22,919 crore and a six-year tenure. The Union Budget 2026-27 raised that outlay to ₹40,000 crore, reflecting the government’s decision to expand the scheme’s scope as industry demand outpaced original projections. Applications under categories that remain open will continue to be accepted until July 2027, with MeitY reportedly holding approval meetings roughly every week to ten days in response to strong industry interest.
Why Components, Not Just Assembly
Union IT Minister Ashwini Vaishnaw has previously described the scheme’s intent as moving India’s electronics sector beyond assembly and into domestic manufacturing of the components and sub-assemblies that sit underneath finished products, camera modules, PCBs, connectors, oscillators, optical transceivers and similar items that rarely make headlines individually but collectively determine how much of a device’s value is actually captured domestically.
The components covered under ECMS span applications well beyond consumer electronics, including smartphones, IT hardware, wearables, telecom, EVs, industrial electronics, defence, medical electronics and renewable energy, positioning the scheme as infrastructure for multiple manufacturing sectors rather than a single vertical.
Context
India’s electronics sector has become one of the country’s fastest-growing export categories, according to the Economic Survey 2025-26, electronics rose to become the country’s third-largest export category in 2024-25, up from seventh position in 2021-22. The government has set a broader target of building a $500 billion domestic electronics manufacturing ecosystem by 2030-31, with component manufacturing under ECMS positioned as a foundational layer for that goal.
The scheme’s approval pace has accelerated through 2025 and 2026: the first tranche of seven applications worth ₹5,532 crore was approved in October 2025, followed by a second tranche of 17 projects worth ₹7,172 crore, a third tranche of 22 proposals worth ₹41,863 crore including approvals for Dixon, Samsung Display, Foxconn and Hindalco, and a further batch of 29 applications worth ₹7,104 crore in March 2026, before this latest round of 31 approvals.
What Comes Next
MeitY has indicated that several ECMS-approved projects have already moved into implementation, though the government has not yet published detailed operational timelines for the newly approved batch. The scheme’s application window for open categories remains active until July 2027, suggesting further approval rounds are likely as more manufacturers apply.
About ECMS: The Electronics Components Manufacturing Scheme was notified by the Ministry of Electronics and Information Technology on April 8, 2025, to build a domestic electronics component supply chain and integrate Indian manufacturers with global electronics value chains, offering turnover-linked, capital-expenditure and hybrid incentive structures.