The Chairman of country’s largest steel producer, Steel Authority of India (SAIL), C.S. Verma , in a conversation with Business Line , said that any company that is investing in India only with the intention of getting mineral assets on allocation basis but delaying investment in manufacturing will not be encouraged. This comes after ArcelorMittal (ranked first globally) and Posco (ranked fifth) announced the withdrawal of their projects from Odisha and Karnataka respectively.
Excerpts from the interview:
There has been talk of 300 million tonnes of capacity creation. Now, after the withdrawal by ArcelorMittal and Posco, there is doubt whether this target can be achieved. As a key steel-maker, what is your opinion?
Three hundred million tonnes capacity creation by 2025 was not dependent on the ArcelorMittal or Posco ventures alone. India has got inherent advantages.
We have the raw material in the form of iron ore, a ready market and good demand potential. We have vast expanses of land, the basic pre requisite for setting up a plant. We have the required manpower.
So, I do not think the withdrawal by ArcelorMittal or Posco is going to impact in any way the target for steel capacity creation set by the Government.
Second, India has one of lowest per capita steel use numbers in the world at present. Today, the per capita consumption of steel is 55 kg a year. In rural India, where 60 per cent of the population lives, per capita consumption is just 15 kg per annum. So there is lot of demand potential that is yet to be tapped.
This is not the case in developed or saturated economies such as European countries or the US. To tap this potential and to achieve our GDP target growth, we must have capacity creation. Steel is a basic factor in achieving the GDP target.
But even smaller Indian companies are withdrawing or putting on hold their projects. Is that a concern?
Not a single Indian steel company has withdrawn or put on hold any major steel capacity creation. Monnet Ispat is a small company with a minor share in total capacity. Small units are affected by certain policies. It is a question of ‘survival of fittest’. No big company, be it SAIL, TATA Steel or JSW, has withdrawn or put on hold any of its projects.
Do you think grievances by foreign players about regulatory or land issues are real?
We cannot give everything on a platter. To set up an industry, we are giving them a ready market. We are giving them all the inputs and a proper channel for investment. They have to take their entrepreneurship forward to set up shop in India. Now they want to get mineral assets on an allocation basis.
If their intent is only to get the mineral assets allocation and to delay making investments in manufacturing, who is going to encourage that?
So, in your opinion, land is not a big issue?
It is not a big issue. You should know how to go about it. You have to comply with the law for land acquisition.
There is an adequate land-bank is available, you have to comply with the law to get the land.
So, is there something else, some other reasons for the withdrawal?
I am not concerned about the withdrawal. These players are thinking about the global scenario. The global economy as a whole is not doing well.
The sentiment is depressed and globally capacity utilisation of steel is only 80 per cent.
But conditions are different from the Indian point of view; as it is a developing economy, we need more capacity. Capacity in India is just 80-85 million tonnes. We are 10 per cent of the Chinese capacity of around 800 million tonnes.
The Indian situation is totally different from the global scene. I do not see why any serious player should withdraw. Only non-serious people will withdraw from India.