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The Centre has stood by the Indian steel industry to protect it from the reckless and unethical dumping by foreign suppliers. But this intervention alone is not enough. It needs to put in place a policy framework that would make it intrinsically competitive and self-sustaining as the second-largest steel producing nation.
Indian Steel manufacturers suffer from serious disadvantages regarding raw materials and services. The Budget should consider ways to overcome cost handicaps affecting the competitiveness of the domestic industry.
The Budget should reduce royalty and statutory levies payable on basic raw materials, including iron ore and thermal coal, both of which taken together add up to nearly 20 per cent of the product delivery cost, compared to the second-highest of 4.5 per cent in case of Brazil.
The Indian steel industry, largely due to unstable global markets, has gone through an unprecedented stress during the recent years and is still struggling to stand on its own feet. The Centre should fix a time-bound plan for restructuring debt and urge financial institutions to support them with generous lending norms rather than invoking punitive measures that could push them into further crisis.
The financial recovery of existing companies is critical for future investments in the steel sector of India.
While India’s present per capita steel consumption is still among the lowest and one-fourth of the global average, demand continues to be tepid. The Centre needs to take decisive steps to stimulate the steel demand through enhanced spend on infrastructure and housing segments. It also needs to make compulsory the use of steel in construction of certain infrastructure segments including bridges, flyovers and high-rise buildings.
In addition, the Centre may consider making it mandatory to use only Indian steel for its own as well as public-private projects. With a view to promote the usage of steel, the Centre should consider including it in the ‘Merit’ category of GST classification.
The writer is Managing Director and Group CEO of Jindal Steel & Power Ltd
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