CRGO Steel Probe Sparks MSME Concerns Over Costs & Power Tariffs

New Delhi, Jul 1 (KNN) An anti-dumping investigation into Cold Rolled Grain Oriented (CRGO) steel, a specialised input material critical to transformer manufacturing, has drawn sharp opposition from micro, small and medium enterprise (MSME) transformer makers and raised concerns about the long-term impact on electricity tariffs for consumers.

The Commerce and Industry Ministry ordered the probe on 22 June on the basis of an application filed by JSW JFE Electrical Steel Nashik Private Limited — a joint venture between JSW Steel and Japan's JFE Steel Corporation, and currently the only domestic producer of CRGO steel in India. 

MSME Manufacturers Raise Alarm

CRGO steel accounts for 40 to 50 per cent of the cost of a transformer, making it the single largest input cost for small manufacturers. 

Ajay Sanghi, MD, Jaipur-based distribution transformer maker Sri Krsna Sudarshan Urja, said any increase in CRGO prices would ultimately be passed on to consumers, and that his firm would submit its concerns to the Directorate General of Trade Remedies (DGTR) during the investigation.

An MSME federation official, speaking on condition of anonymity, said, “JSW is the only beneficiary of the anti-dumping duty investigation in a sector dominated by MSME,” The Indian Express reported. 

The official alleged that with the company targeting production capacity of 3.5 lakh tonnes by FY28 and enjoying Production Linked Incentive (PLI) benefits, the investigation appeared aimed at extracting higher prices rather than addressing genuine cost pressures.

Tariff and Grid Expansion Concerns

CRGO steel is used in transformer cores to enhance magnetic properties, with an estimated 98 per cent of all CRGO produced going into the transformer business. 

Speaking to The Indian Express, Alekhya Datta, Fellow and Director, Electricity and Renewables Division, The Energy and Resources Institute (TERI), said CRGO typically accounts for 15–20 per cent of a standard transformer’s bill of materials.

“So a 10 per cent rise in CRGO prices can raise transformer costs by roughly 1.5–3 per cent, while a 20 per cent rise can raise transformer costs by about 3–6 per cent,” he added.

The concern is amplified by India's ongoing grid expansion plan, which targets growth in transmission network capacity from 4.91 lakh circuit kilometres in 2024 to 6.48 lakh circuit kilometres by 2032, with overall capacity rising from 1,290 GVA to 2,342 GVA over the period. 

Datta noted, however, that the tariff impact would be gradual rather than immediate, as capital expenditure is recovered over asset life under the regulated tariff framework.

“Therefore, higher CRGO prices would not immediately raise consumer tariffs in one billing cycle, but they can increase approved T&D capex and gradually feed into electricity tariffs over time,” he said.

Industry and Regulator Positions

Alok Sahay, Secretary General, Indian Steel Association (ISA), defended the case for domestic production, noting that CRGO steel requires 7-10 times the investment per tonne compared to conventional greenfield steel. 

Sahay added, “Many of these projects also have foreign investors. If the government allows subsidised steel imports to continue unchecked, it could undermine investors’ confidence, prompting overseas investors to reconsider or withdraw their investments in India,” as quoted by The Indian Express.

(KNN Bureau)