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From 110 to 300 million tonnes by 2025, reads the Steel Ministry’s vision document. At 60 kg per capita, the country’s steel consumption lags the global average by over four times, however, even at today’s subdued volumes it contributes nearly four per cent to the nation’s industrial output.
Making steel is by no means cheap, every million-tonne capacity costs a billion dollars! Despite the uninspiring history and the huge capital investments involved, the 300-million-tonne target may not be over-ambitious, if the government is able to back its talk with appropriate action.
Topping the industry’s wishlist is a 25 per cent safeguard duty on the imports of all semi- and fully-finished steel products, liberalising capital flows to new steel projects, extending benefits currently enjoyed by the infrastructure sector and preferential allocation of natural minerals for meeting its captive production needs. Integrated steel projects are clearly of national importance, it is time for policy makers to acknowledge this and fast track approvals.
Any delay in responding to the threat of imports from China and Russia may derail India’s plans of spurring the growth of the domestic manufacturing sector and may even turn the industry sick. In recent years, the industry has built up a huge excess capacity for manufacturing pellet and should, therefore, be allowed to export it freely, unhindered by duties or punitive rail freights. This will give the industry a much-needed boost. Also, the government must aim to soften rail freight rates given that Indian businesses already fork out far more on logistics as a percentage of their turnover compared to their peers in China or in any developed economy.
Similarly, the global slowdown in demand has forced many transnational steel majors to push into India for sales creating a glut that has seen the price crash by 20 per cent in the last two months. The resultant crisis has placed even India’s large steel makers under stress and led to the closure of several medium and small units. Sure, steps like the recent amendments to the MMRDA Act have kindled a sense of relief among steel makers with regard to raw material security. But much more needs to be done. Otherwise, the 2025 vision will be just a dream.
Ravi Uppal is Group CEO & MD, Jindal Steel & Power
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