The Directorate General of Foreign Trade has canceled the licenses of 15 Pre-Shipment Inspection Agencies after discovering fraudulent certification practices. This move has created logistics bottlenecks for metal scrap importers, leading to stranded cargo at ports and increased costs for the secondary steel industry.
The Directorate General of Foreign Trade (DGFT) has officially de-recognized 15 Pre-Shipment Inspection Agencies (PSIAs) following an investigation that revealed systemic failures in compliance. These agencies were responsible for verifying that imported metal scrap is free from radioactive substances, explosives, and other prohibited materials. The regulator's decision came after internal reviews showed that these firms were issuing mandatory safety certificates without conducting the required physical inspections, which poses a significant security risk for the country.
This regulatory action has created an immediate bottleneck for importers, particularly those bringing metal scrap into India through major hubs like Mundra. Because the certificates issued by the banned agencies are no longer accepted, customs authorities are rejecting shipments that were previously cleared for arrival. Consequently, many companies now find their cargo stranded at ports. Importers are facing the financial burden of paying heavy penalties and the additional costs of hiring new, authorized agencies to perform re-inspections.
For businesses in the secondary steel and metal recycling sector, these delays impact more than just logistics. Metal scrap is a critical raw material, and interruptions to the supply chain can lead to production delays or increased operational expenses. Many importers argue that the current rules, which include a strict two-day window for document uploads, are difficult to meet when cargo is already in transit. Companies that were not aware of the agency's non-compliance until the cancellation are now bearing the cost of these regulatory changes.
The Material Recycling Association of India (MRAI) has highlighted the current crisis as a reason to modernize the import process. Industry leaders are advocating for a shift away from the current PSIA mechanism, which relies on third-party agencies located in foreign countries. MRAI points out that 18 major Indian seaports are already equipped with advanced radiation scanning technology. They argue that moving the verification process to domestic ports would be more reliable, efficient, and cost-effective than relying on foreign inspections.
While the DGFT maintains that source-side inspections are a vital safeguard for national security, the regulator has indicated a willingness to discuss the expansion of 'Safe Country' lists with the Department of Revenue. By exempting more regions from the mandatory PSIA requirement, the government aims to reduce supply chain volatility while continuing to ensure that hazardous materials do not enter the country. Future updates from the government regarding these 'Safe Country' lists or new port-side scanning protocols will be important for importers to track, as these changes will determine the pace and cost of metal imports in the coming months.