India to miss 124 MT steel capacity target of 2011-12

India is unlikely to achieve the desired target of annual steel production capacity of 124 million tonnes (MT) by 2011-12 due to slow progress in big expansion projects of different companies.

"India is likely to have an annual steel production capacity of 120.62 MT against the envisaged 124 MT by 2011-12 mainly due to delays in expansion projects of various steel makers," a top government official told PTI.

The country has an installed annual production capacity of 64.44 MT at present.

"The pace of expansion projects of steel makers like SAIL, Tata Steel, JSW, Essar had slowed down due to slump in steel demand following the global economic crisis last fiscal. Also, SAIL revised its production target for 2011-12. All this impacted the overall annual production target," the official added.

Regulatory delays and problems in acquiring land have also been hampering such projects. The domestic steel sector has so far attracted a staggering investment of about Rs 11 lakh crore, including the proposed mega investments of global giants like ArcelorMittal and Posco.

However, the targeted production capacity by 2011-12, does not include that of the projects proposed by these global firms.

Tata Steel's new project in Orissa is also not part of the proposed production capacities to be installed by 2011-12.

ArcelorMittal has proposed to set up mega steel projects in states of Jharkhand, Orissa and Karnataka and is also exploring similar opportunities in Maharashtra.

The L N Mittal-led firm's proposed steel plants worth Rs 1 lakh crore-- one each in Jharkhand and Orissa-- are facing inordinate delays to get started for over past four years.

Similarly, South Korean steel giant Posco's Rs 54,000-crore steel project in Orissa is also facing delays.

SAIL Chairman S K Roongta had recently expressed concerns on the delays being faced by mega plants of global steel majors, saying such projects would bring in more competition in the domestic market ultimately benefiting the consumer.

Domestic steel major SAIL itself has revised expansion target three times. It had earlier proposed to almost double its annual production capacity to 26 MT by 2010- 11. Later, it extended the timeline to 2011-12 and finally, last year, it slashed the target to about 23 MT.

Parliament's Standing Committee on Coal and Steel headed by Trinamool Congress leader Kalyan Banerjee reviewed the revised expansion plans in a meeting held yesterday. Now the next meeting of the Parliamentary Panel is scheduled to be held on February 19.