Silicon Steel Explained: Grades, Specs & Real-World Uses

Table of Contents

• Introduction
• Industrial Applications of Silicon Steel in India
• Grades and Specifications: Choosing the Right Type
• Procurement and Supply Chain Challenges for MSMEs
• How MSMEs Can Gain from Government Support and Innovation
• Conclusion

Silicon steel isn’t new. But its role in India’s industrial story is changing—and fast. If you’re running a small or mid-sized manufacturing unit today, especially in anything electric, odds are you’re already working with it, directly or indirectly.

Here’s something to clear up right away: silicon steel is the same as electrical steel. The terms are used interchangeably in procurement and supply chains. It’s a special kind of steel, alloyed with silicon—typically between 1% and 3.5%—to enhance its magnetic properties and minimize core loss. That’s what makes it ideal for transformers, motors, and other electrical components.

But not all silicon steel is built the same. You’ll hear terms like CRGO (cold-rolled grain-oriented) and CRNGO (non-grain-oriented) thrown around. Here’s the real-world difference: CRGO is optimized for transformer cores, thanks to its directional grain alignment. CRNGO? That’s your go-to for motors—where magnetic flow shifts directions constantly.

Now here’s the part most people skip: your choice between the two isn’t just about specs. It shapes your entire supply chain. One Delhi-based MSME that builds induction fans for industrial cooling learned this the hard way. They switched to cheaper imported CRNGO—only to deal with inconsistent performance and massive rework costs. Eventually, they moved to a BIS-certified domestic supplier. Slightly higher per-unit cost, but dramatically better control.

The silicon content matters too—1% more, and your efficiency jumps; 1% less, and you’ve got overheating, noise, and returns. It’s not academic. It’s what separates a profitable production run from a loss.

So, why should MSMEs care now? Because demand is shifting. Faster electrification, EV push, rising energy audits—these forces are converging. And as the government dials up schemes like the PLI for specialty steel, those who understand how and what to buy will move quicker. Everyone else will chase.

In procurement, the cost isn’t just monetary—it’s strategic.

Industrial Applications of Silicon Steel in India

Silicon steel isn’t flashy. You won’t see it on a product label or featured in glossy marketing decks. But talk to any MSME in the electrical or energy sector—and they’ll tell you, it’s everywhere. In motors, in transformers, in power-saving components. It works quietly, doing heavy lifting behind the scenes.

Transformers Still Depend on CRGO

In transformer manufacturing, grain-oriented silicon steel (CRGO) remains the go-to. Why? Because it’s built to carry magnetic flow in a single direction—perfect for transformer cores. That grain alignment keeps energy loss low and performance stable.

Here’s a story from the ground: A transformer-maker in Jharkhand was using imported CRGO. They switched to a local BIS-certified batch, hoping for shorter lead times. To their surprise, defect rates dropped. Not dramatically—just enough to avoid three contract penalties over the year. That’s how decisions made in procurement ripple all the way to delivery.

Motors Run Better on CRNGO

Now flip to motors. Here, non-grain-oriented silicon steel (CRNGO) takes over. Because in motors, magnetic fields change direction constantly. CRNGO handles this without noise or uneven wear. MSMEs in cities like Rajkot or Faridabad use it to build everything from fans to EV drive motors.

One shop-floor manager in Ludhiana told us straight: “Once we started cutting CRNGO in-house, vibration issues dropped by half.” It wasn’t a big process change. Just better material.

In Renewables, Demand is Rising Fast

Clean energy is pushing silicon steel into newer spaces. MSMEs building solar inverters or wind generator parts are turning to higher-grade CRNGO—tailored for heat, frequency, and tight tolerances.

A component maker from Coimbatore shared how they used to import from Taiwan. Long delays, unpredictable shipping. They finally partnered with a steel mill in Gujarat that now produces custom-width CRNGO for their wind motor cores. No delays since. And they’ve expanded to new orders in Rajasthan.

Efficiency Isn’t a Buzzword—It’s a Margin

Here’s the part many overlook: every 0.1% drop in core loss adds up. Less heat. Less energy consumed. Fewer call-backs. For MSMEs dealing in bulk orders or tender-linked supply, that efficiency shows up not just in the electric bill—but in client satisfaction, renewal rates, and, frankly, fewer headaches.

In this sector, you don’t always get to change your prices. But you can change your materials. That’s where the leverage lies.

Grades and Specifications: Choosing the Right Type

Choosing the right silicon steel grade isn’t just about what’s available in the warehouse. For MSMEs, it’s about matching material performance with delivery promises. When production margins are tight, and client specs stricter than ever, a wrong grade can unravel weeks of planning.

Let’s get into what matters—not just what’s printed on the datasheet.

CRGO: Built for Transformers, Not Always Needed

Grain-oriented steel, or CRGO, is designed for directional magnetic flow. That’s why it’s used in transformer cores—especially those in substations and power distribution panels. It handles magnetic stress with minimal energy loss.

But not every transformer needs the best grade on the shelf.

One MSME in Nashik had been ordering high-grade CRGO across all their projects. After an internal audit, they found most rural contracts—under 63 kVA—were over-specced. By shifting to M3-grade, still BIS-certified, they maintained compliance and shaved lakhs off their annual steel bill. No drop in reliability—just smarter matching.

CRNGO: For Motion, Flexibility, and Speed

Where there’s movement—motors, generators, compressors—non-grain-oriented steel (CRNGO) is the unsung hero. Unlike CRGO, its grain structure is uniform, which means it works under multi-directional magnetic loads.

A small fan motor supplier in Rajkot told us, “We don’t touch CRGO. For us, CRNGO is enough. We cut it in-house, test it, pack it. Simple, fast.” That simplicity matters when delivery windows are narrow and machines don’t stop for paperwork.

Now, a word of caution: some budget-grade CRNGO comes with lower silicon content—around 1%. It’s cheap, yes, but it tends to generate higher eddy current losses. If you’re building a motor that’s supposed to run 24/7, that short-term saving can turn costly.

High-Silicon & Specialty Grades: Small Market, Big Stakes

Some sectors push silicon steel to its edge. Defense. Aerospace. Precision inverters for export markets. These buyers demand high-silicon steel—up to 3.5% content—coated, treated, and tested to custom specs.

These aren’t bulk buyers. But they pay attention to details most MSMEs never think about: insulation resistance, noise suppression, hysteresis loss. Often, they’ll ask for certifications outside BIS—ASTM, IEC, or even private third-party labs.

If you’re an MSME even eyeing this space, you’ll need to budget not just for material—but also for testing, traceability, and documentation. It’s more paperwork—but also higher margins.

Not Just the Steel. The Fit.

The real trick? Knowing what your customer values.

A pump motor for a rural electrification board may prioritize price and compliance. A custom motor for a CNC machine exporter might care about quiet running, thermal efficiency, or lifespan. Same motor housing. Different expectations.

Procurement, at this level, stops being transactional. It becomes strategic. And choosing your silicon steel grade? That’s where the strategy begins.

Procurement and Supply Chain Challenges for MSMEs

Buying silicon steel might look simple on paper: get the grade, compare prices, place the order. But for MSMEs, it’s rarely that clean. Between fluctuating input costs, limited working capital, and inconsistent supplier reliability, procurement becomes a balancing act—every single time.

Local vs Imported: The Classic Dilemma

Indian MSMEs often face a tough choice. Go for local supply and deal with possible quality inconsistencies—or import and face delays, duties, and minimum order constraints.

For instance, a Bengaluru-based EV parts maker imported CRNGO sheets from South Korea, only to lose 19 days in customs over a compliance mismatch. That delay pushed their dispatch into the next quarter, triggering penalties from an OEM buyer. They now source through a local distributor in Gujarat—not perfect, but predictable.

And that’s the trade-off: control vs. compliance. Importing often gives you superior grades at tighter tolerances. But unless your logistics and documentation workflows are bulletproof, the risks outweigh the gains.

Trust and Transparency in Vendor Relationships

This is the quiet pain point that rarely gets discussed. Many MSMEs, especially those without strong technical teams, buy based on rate cards and verbal promises. That’s a dangerous game.

Without standardized testing, material traceability, or batch certifications, even a small deviation in silicon content can result in poor magnetics, overheating, or component failure.

One Chhattisgarh-based pump manufacturer shared how they lost a year-long municipal contract because their motor coils failed a field test. Post-analysis revealed subgrade steel from a reseller who couldn’t produce a proper test certificate. That one miss? It cost them ₹27 lakhs in claims.

In practical terms, MSMEs need more than suppliers—they need partners. Those who offer:

• Mill test certificates
• BIS compliance records
• Flexible payment terms
• Reasonable lead times

Those four things alone often make the difference between scaling up and shutting shop.

Rising Steel Prices and Working Capital Stress

Even when suppliers are reliable, price volatility creates planning nightmares. In the past two years, silicon steel prices have swung by as much as 22%. For MSMEs running on lean margins, that’s not just volatility—it’s a threat to existence.

The bigger players hedge. MSMEs don’t have that luxury. A missed forecast, a rejected batch, or a payment delay from a government client—and you’re suddenly buying high, selling low, and holding dead inventory.

This is where fintech-enabled procurement platforms and steel marketplaces have started to play a role. By offering short-term credit, real-time pricing, and pre-verified sellers, they ease the procurement burden. Still early days, but worth watching.

How MSMEs Can Gain from Government Support and Innovation

It’s easy to get cynical about government schemes—especially if you’ve ever filed a tender or waited months for a payment. But if you’re in the business of making motors, transformers, or anything that runs on silicon steel, you can’t afford to ignore what’s changing around you.

Policies That Used to Sound Distant Are Now Right on the Shop Floor

The PLI scheme for specialty steel is the headline grabber. Sure, it’s designed for big names—primary steel producers, integrated mills. But here’s the part people miss: those players don’t work in isolation. They need laminators, stampers, winders, coating partners. That’s where MSMEs come in.

Take a Noida-based MSME supplying transformer parts. They weren’t part of the PLI directly—but because their client was, they had to align with BIS standards and traceability rules. Painful at first. But two months later, they landed a second client who came knocking because of that upgrade. Sometimes, growth hides in compliance.

Tenders, Quotas, and Paperwork That’s Finally Starting to Matter

For years, public sector procurement was a black box. You’d register, submit quotes, and hope. Now? It’s still messy—but MSMEs are seeing real outcomes. Especially through platforms like GeM or vendor onboarding at NTPC, BHEL, or Indian Railways.

Here’s what’s different: verified suppliers with compliant steel—the ones who can show actual test data—are being fast-tracked. Not always. Not everywhere. But enough to matter.

One laminated steel manufacturer in Nagpur started winning state electricity board tenders after they invested in in-house quality checks and digitized their bidding. No rebranding. No fancy marketing. Just better paperwork and timely dispatches.

And Then There’s Innovation—Yes, It Exists in MSMEs Too

R&D sounds like something for MNCs and labs. But scratch the surface, and you’ll find two-person workshops testing different slitting patterns to reduce eddy losses. Or trying alternate annealing cycles. Or just reworking their lamination dies to use every last inch of a CRNGO sheet.

One MSME in Salem partnered with an engineering college to build low-noise induction motors. They ran tests with four different CRNGO sources, analyzed harmonics, and ended up licensing their rotor design to a pump manufacturer in Malaysia.

These aren’t isolated stories. They’re signals. Of where things could go—if MSMEs are given the right mix of clarity, capital, and consistency.

Conclusion

Most MSMEs don’t think twice about the steel they buy. They look at the rate, the lead time, maybe a supplier name they’ve used before. That works—until it doesn’t.

Because silicon steel isn’t regular stock. It’s tuned for performance. For losses that don’t show up right away. For noise, heat, and efficiency that only become a problem months down the line—when you’ve already shipped.

The difference between CRGO and CRNGO, between a BIS-certified coil and an untested one—that difference lives in your returns, your breakdowns, and your next contract.

No scheme or subsidy can replace that judgment. You earn it the hard way—by asking the right questions before the PO is signed.

The MSMEs that figure this out early? They stop firefighting. They start scaling.

And the best part? You don’t need to be a large enterprise to do it. You just need to care a little more than the next guy.

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