Jaitley asks steel industry to be more cost competitive

Finance Minister Arun Jaitley has asked the steel industry to be more competitive as ‘hand holding’ is possible only to a certain extent. This remark comes days after the Finance Ministry raised the import duty on various steel products for a second time in three months to protect the domestic industry from cheap imports from China and other countries.

“You have also to enable your own self for cost competitiveness. In the eventual race, hand-holding can take place up to a point. Beyond that point, one has to stand up on your own strength, run the industry on your own strength,” he said while inaugurating a conference of secondary steel makers here on Saturday. Steel is one of the five sectors (the others are, highways, power, discoms and sugar) facing stress due to lower demand and cheap imports, among other reasons.

Jaitley expressed concern over the spiral effect of stress in the steel sector, which upsets the financial performance of banks and which finally affects the loans available to other sectors. He stressed on increasing competitiveness rather than going in for adhoc measures. “Band-aid solutions do not work, you will have to address the root cause. Take into account various factors and make our domestic industry competitive. And when you become competitive, the ability of the external factors to adversely impact you is also reduced,” he said.

Overall economy

Admitting that the economy is passing through a challenging phase, he said most of the challenges faced by the Indian economy were created by external factors, even as he expressed confidence in the country’s strong fundamentals to withstand such transient global trends.

“I have no doubt that our ability to withstand the transient global trend, created predominately by external factors, is very strong,” he said while emphasising that macroeconomic indicators such as inflation, forex reserves, capital investment in infrastructure, and revenue collection are all positive.

Referring to the global turmoil, he said the world was passing through challenging trends and prospects for a US Fed rate hike were creating uncertainty. “The US is a big economy, anything that happens there has a big impact across the globe,” he said while adding that China is another major global economy and if their manufacturing data throws up adverse indications because a global slowdown is going to impact them, that itself has an impact and shakes the entire scenario.

However, “these are transient trends. If an economy exists on its own solid foundation and its own fundamentals are strong, then it is not a very challenging task to withstand these transient trends,” he said.

“Our approach in India is that our own fundamentals become stronger and stronger so that our ability in a globally integrated economy to withstand these transient trends increases (and) we acquire a certain immunity that beyond a few days we are able to withstand those trends,” Jaitley said.

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