India’s power sector is facing a 30 percent shortage of cold rolled grain oriented (CRGO) steel, essential for electric motors and transformers, according to a report by Global Trade Research Initiative (GTRI) issued on Monday, December 16.
According to the report, domestic production meets only about 10-12 percent of demand, with India relying heavily on imports.
The immediate cause of the CRGO steel shortage is import uncertainty caused by the delayed license renewals by the Bureau of Indian Standards (BIS) for many foreign suppliers from Japan, South Korea, and China.
Many of the licenses are set to expire soon, causing shortages and uncertainty in the power sector, the report said.
Foreign suppliers require BIS certification under a quality control order, which ensures quality but restricts options to a few approved grades and vendors, often leading to long lead times.
In the fiscal year 2023-24, India, one of the largest consumers of CRGO steel, required 400,000 mt with only 50,000 mt produced in the country and imported 239,000 mt from countries like China, Japan, Russia, and South Korea.
India’s CRGO demand is expected to grow by 10-12 percent annually, driven by the expanding power sector and the goal to integrate 500 GW of renewable energy into the grid by 2030.
The demand will also grow as the Bureau of Energy Efficiency has mandated a star-label upgrade for distribution transformers starting from January 1, 2025, pushing the industry to seek higher-grade CRGO steel, the report said.
To address the CRGO steel shortage, the report recommends that India must prioritise local production, as CRGO is now considered a strategic material, and supply may remain limited. Without action, this shortage could jeopardize India’s ambitious energy goals. CRGO’s grain orientation reduces energy loss, making it essential for transformer cores, which are central to India’s power distribution network.
Additionally, the entire BIS process needs an urgent review by independent auditors, the report said.
BIS should expand the list of approved CRGO grades and suppliers to support smaller manufacturers and MSMEs, who are the most vulnerable to these shortages, it added.
