Exports of steel utensils from Nepal to India have ground to a halt after the southern neighbour made it mandatory for raw materials used in steel products to bear a quality certification mark.

Previously, the Bureau of Indian Standards (BIS) certification was required only for finished products. This move was aimed at curbing Chinese imports. However, about two months ago, India extended the requirement to raw materials, triggering an export crisis for manufacturers in Nepal, particularly those operating within the Bhairahawa-based Special Economic Zone (SEZ).

Before this shift, in 2020, the Indian government had instructed the BIS to enforce mandatory standards for imported goods in line with global quality norms. The move was widely interpreted as a strategy to curb the entry of Chinese products via neighbouring countries.

After banning Chinese mobile apps, India went on to restrict the import of over 370 Chinese products.

Industry insiders believe the latest regulation is part of the same strategy.

“India does not want any product from Nepal that contains Chinese components, whether steel or hydroelectricity. This is extremely concerning for Nepal’s top exporters,” said one exporter who asked not to be named.

According to traders, after Nepali manufacturers complied with earlier BIS requirements for finished products, India added another layer—demanding BIS certification for imported raw materials as well, a move seen as creating new barriers to trade.

Currently, two major companies—Bhistar Global Pvt Ltd and Panchakanya Steel—operate within the SEZ and have been exporting steel-based products to India. Panchakanya exports stainless steel tanks, while Bhistar supplies a variety of household steel utensils.

Devendra Sahu, general manager of Panchakanya Group, said exports have completely stopped since the policy change. “Until now, we were exporting goods after obtaining a production certificate from Nepal’s Department of Industry by adding value to imported raw materials,” said Sahu. “But now, the rules essentially require the raw material to be Indian, while the manufacturing can happen in Nepal.”

Bhistar has already obtained BIS certification for its finished products. However, the factory has been forced to halt production as its raw materials—mostly sourced from China—now also require BIS certification, which is not feasible.

The company is currently appealing to the Siddhartha Chamber of Commerce and Industry and other relevant institutions for support. “We import raw materials from China, add value in Nepal, obtain certification from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and then treat it as a Nepali product,” said Arbind Tripathi, Chief of Accounts at Bhistar Global.

Before the change, Bhistar was producing about 400 tonnes of kitchen utensils each month. Now, with exports blocked, production has dropped to just 20 to 30 tonnes a month for the domestic market. Tripathi said roughly 200 tonnes of finished goods are currently stuck in their warehouse due to the export ban.

Ram Prasad Regmi, chief of the Bhairahawa Customs Office, confirmed that exports of such goods have been halted for nearly two months. “India recently installed new software for its Steel Import Monitoring System,” he said. “Nepal is not listed in that system, which has created technical issues.”

Regmi explained that the core of the problem lies in India’s decision to make BIS certification mandatory for raw materials in addition to finished products. “Nepali manufacturers have always sourced raw materials from wherever they are cheapest. Now it seems that only raw materials sourced from India will be allowed for exports to India,” he said. “Otherwise, there will be barriers.”

He criticised the new Indian regulation, saying it does not align with international trade norms. “No other product category exported from Nepal is subjected to such a rule. With raw material imports now blocked, some factories may be forced to shut down,” Regmi warned.

He also noted that exports of such steel goods contributed to foreign currency earnings and helped cut the bilateral trade imbalance. “This isn’t just a business issue. It affects our national trade performance,” he added.

According to customs data, steel and iron utensils ranked sixth among Nepal’s top 10 export items in the last fiscal year. Nepal exported 38,725 tonnes worth Rs736.25 million.

Netra Acharya, president of Siddhartha Chamber of Commerce and Industry, said the Indian regulation is deliberately restrictive. “India imposed this rule as Nepal sources raw materials from China,” he said. “But getting a BIS logo on raw material is practically impossible. This has put investors in a tight spot.”

Acharya said the chamber immediately raised the issue with concerned authorities when the problem emerged. “We continue to press the relevant government bodies to act. The private sector alone cannot solve this. The government must take the initiative and engage India diplomatically,” he said.