The Hindu Business Line : New steel policy silent on SEZ status for mega plants

WITH the National Steel Policy, recently cleared by the Government, silent on the issue of Special Economic Zone (SEZ) status for mega steel plants, POSCO's proposed steel project in Orissa would have to fight for the special status in the normal course.

The South Korea-based Pohang Steel Company's (POSCO) proposed Rs 51,000-crore integrated steel project in Orissa and the London-based Mittal Steel's proposed Rs 40,000-crore integrated steel plant in Jharkhand are the two largest FDI proposals that have been announced till date.

One main attraction for these foreign companies, apart from the availability of iron ore and growing Indian demand for steel, was getting the SEZ status for their projects that entitles them to huge tax incentives.

The memorandum of understanding between the Orissa Government and POSCO categorically states that "the Government of Orissa shall recommend to the Central Government and facilitate granting of SEZ status as required by the company. This includes granting of various aspects of the project, the status of SEZ Developer or SEZ Unit as the case may be, so as to receive the same incentives and benefits as an SEZ."

The Mittal Steel of LN Mittal, world's largest steel maker, too sought SEZ status from the Jharkhand Government. The company has signed the MoU with Jharkhand Government twice, once in August and the second in October. While the August MoU mentions the issue of SEZ status, the MoU signed in October does not mention it.

The Chief Representative of POSCO in India, Mr Sang Moo Doh, however, is not worried over the development and says they are different things. "The mega steel plants and Special Economic Zones are different. The steel policy will make plans for the steel industry. But the SEZ policy is linked with the policy to push exports and earning foreign exchange," Mr Doh said.

"The Indian steel market is yet to develop and if we supply our products only to the Indian market, domestic companies would suffer. So we will export. Our experience in South Korea and China will be helpful. We will sell locally only at the appropriate time," Mr Doh said.

Efforts to contact Mittal Steel officials proved futile.

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