The Indian Steel Association (ISA), which represents top local makers of the alloy, has urged New Delhi to take immediate steps to ban imports from Iran after a near five-fold increase in shipments that might be traced back to the Persian Gulf nation.

Imports have increased after the imposition of US sanctions on Tehran, the ISA said last week, adding that the trend may have serious implications under CAATSA (Countering America's Adversaries Through Sanctions Act).

Furthermore, surging imports from Iran via the UAE at ‘predatory’ prices have added to the worries of Indian steel companies, the ISA said in a letter to steel secretary Binoy Kumar.

“Steel imports, whether directly from Iran or via transhipment (through) the UAE, should be banned since this trade is in grave violation of US sanctions, which can attract retaliatory measures by the US against India,” ISA secretary general Bhaskar Chatterjee said in the letter seen by ET.

ISA members include JSW Steel, Tata Steel, JSPL, Steel Authority of India and Essar Steel.

Over the past eight years, Iran has steadily raised output while demand locally has shrunk for the tenth largest global producer of the infrastructure alloy. Surplus capacity has climbed to 12.2 mt, or 36%,even as per capita consumption has gone down by 14%. Iran exports 30% of its steel to ASEAN, posing a threat of diversion to India.

While imports from Iran into India went up 66% in 2017-18, in 2018-19 there had been nil imports until December 2018. However, imports were reportedly routed via the UAE with change in country-origin. “It is alarming to note that exports from the UAE, a net importing country, have suddenly surged 390%, including 65,000 tonnes of flat steel products, for which the UAE is conventionally a net importer.This establishes the linkage of transhipment of Iranorigin steel via the UAE,” the steel association said.

Iran’s top three steel companies, which have a 64% share of production, belong to state-owned Iranian Mining and Mining Industries Development and Renovation Organisation on which US sanctions apply, ISA said.