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Steel sector must not depend solely on Govt: PM

Our Bureau

NEW DELHI, Dec. 14

THE second generation reforms that are taking place will bring more competition from major steel producing countries in the world. The Government would try to give the domestic industry a level playing field, but the steel sector should not depend on it alone for protective measures, said the Prime Minister, Mr Atal Bihari Vajpayee.

He was speaking at the presentation of the Prime Minister's Trophy for the `Best integrated steel plant' to Tata Steel (for the year 1997-98) and the Bhilai Steel Plant of Steel Authority of India Ltd (for the year 1998-99).

``I am aware that the Indian steel industry is passing through a critical phase in line with the world steel industry. Steel prices have gone down because the global demand has fallen. The domestic steel industry should be ready to meet the challenges no t only from within the country, but also from outside. They should chart out a well-planned strategy to meet the fierce challenges that it faces,'' he said.

Mr Vajpayee noted that the labour productivity in the domestic steel industry was very low. A South Korean company's productivity was almost 13 times SAIL's. ``It was good that some progress had been made in rationalising the work force, however, we need to do more,'' he said.

``Further, transport costs are high. It is indeed shocking that it costs much more to ship one tonne of steel from Jamshedpur to Mumbai than it costs to import all the way from Rotterdam. Steel accounts for 14 per cent of the goods traffic of our Railway s. Such volumes should give them the clout to negotiate more competitive rates,'' the Prime Minister said.

Speaking on the occasion, the Minister of State for Steel, Mr B.K. Tripathy, said the last few years had been a difficult period for the steel industry. A sharp rise in the prices of vital inputs such as coal and power, rise in transport costs together w ith the slowdown in demand and increased availability through cheap import had severely eroded the profitability of the industry.

Lowering of tariff barriers also exposed the industry to the vagaries of international price fluctuations. To overcome these difficulties, the Government had to support the industry in the areas of reduction of cost of input materials, railway freight fo r movement of raw materials and finished steel. Besides, import duties on finished steel need to be continued for some more time, particularly to discourage cheap imports of prime steel materials.

A worrisome aspect of the import of finished steel was the increasing share of seconds and defectives in various products. The Government was rising to the occasion to look into the interests of the indigenous industries to sort out their problems of exp ort of iron and steel from the onslaught of trade cases abroad, he said.