The draft legislation of the Act has been prepared by the steel ministry and has been forwarded to the ministry of parliamentary affairs. The Act will apply to all projects, industrial or business and enterprises set up with the public money. The Act will make it mandatory for such projects to procure its iron and steel requirements from the domestic industry.

The Act is compatible to the agreements internationally undertaken. It will cover products like iron and steel products (ferrous metal) including structural, plates, coils, sheets and special products in that category, which are indigenously available and globally accepted.

The Act specifies that "every public work or industry being established or run with the aid or assistance of public fund shall, for its requirement procure iron and steel materials indigenously manufactured unless use of such is to be made out of India or contrary to public interest or detrimental to the project or is not indigenously available."

However, the rule will not apply projects if the cost of procurement dose not exceeds Rs 1 crore. The Act provides for termination of contract of the contractor or sub-contractor executing the project irrespective of any provision contained in the contract.

The Act provides for punishment with fine which may extend up to five times the price differential between the indigenous iron and steel materials and the imported material.

The draft legislations have been sent to the major players in the steel industry. However, most steel producers are not very optimistic about the Act being passed by the Parliament. There has always been a need for this kind of an Act, but the government always seems to have backed out due to pressure, a senior official from a large steel manufacturing company said.