India expects ArcelorMittal JV to start production in two years

India expects a joint venture between state-owned Steel Authority of India Limited (SAIL) and ArcelorMittal to start producing automotive-grade steel in two years, a government official said on Tuesday.

Officials from the two companies are due to meet on Thursday to take forward talks about a proposed 60 billion rupee ($902 million) plant that will produce 1.2 million tonnes of steel per year to begin with, Steel Secretary Aruna Sharma told Reuters.

SAIL and ArcelorMittal, the world's largest steel producer, signed a preliminary agreement in May last year to expand in what is one of the world's fastest growing steel markets and a major car exporter.

"In another two years it should be in the manufacturing stage, provided we freeze everything within one and a half months and in December we take off," Sharma said. "We will go more for import replacements. We have solutions for it."

She said the government was working on raising demand for steel in India - whose per-capita consumption of about 60 kg is less than one-third of the global average - by replacing concrete with steel in major infrastructure projects.

The World Steel Association expects India's steel demand to rise 5.4 percent this year and next, even as countries such as China see a decline.

Apart from ArcelorMittal, India's growing steel demand is also keeping other major companies such as South Korea's POSCO interested, despite regulatory hurdles and difficulties acquiring land.

Sharma, who moved to the steel ministry more than two months ago, has already met POSCO officials who are eager to expand in India despite the de facto scrapping of the company's proposed $12 billion steel plant in the eastern state of Odisha after a decade of protests over land.

"They will like a plug-in kind of an arrangement (to set up a new plant)," she said.

Sharma also said that to protect the domestic steel industry from cheap imports, the government may impose provisional anti-dumping on 21 products within two weeks.

Top Indian steel makers such as JSW Steel Ltd, Tata Steel Ltd and Jindal Steel & Power Ltd have lobbied the government hard to take more measures to protect their margins from cheap imports from China, Japan and South Korea.