Although no industry official was willing to go on record, they dubbed the proposal as "retrograde" and "anti-reform". Such a regulatory policy will be detrimental to the growth of the sector, they pointed out.

"The global steel industry is growing at around 3.5 per cent and in such a situation, a fast developing country such as India should not have any restrictions on its core sectors," said the CEO of a company.

Another senior executive said: "In the last few months, the user industry has faced some problems in the form of less availability of material at high prices. However, a continuous regulatory system may stump the growth of the sector."

In a statement, Moosa Raza, president of Indian Steel Alliance -- the association of the country's five largest steel companies said: "ISA has made a note of the statement regarding proposed setting up of the National Steel Regulatory Commission and that it would like to examine the proposal and its possible implications in detail before commenting on the subject."

The government should address issues such as import duty cuts on raw materials and availability of cheaper raw material, rather than coming up with a regulatory mechanism which would hamper the sector's natural growth, the industry executives felt.

A steel sector analyst said: "If the government feels that the steel industry has done well in the recent months when the prices surged, it should remove protectionist policies such as the 15 per cent import duty on hot-rolled coils. This will lead to a more competitive scenario and the country will be in sync with the global situation."

Taking a similar stance, another industry executive said, "There are certain value-added steel products used for automobiles, which have a high demand only in the international market. Therefore, a general restrictive policy will hurt domestic industries which produce these products."

The proposed National Steel Price Regulatory Commission would supervise issues relating to the price and distribution of steel to ensure that the products reach the consumers at the right price and in adequate quantities.

The ministry has also supported a demand to abolish the 5 per cent import duty on scrap.