Steel demand growth down to 2.8% in H1: Steel secy

Growth in domestic steel demand dipped to 2.8% in the first half this fiscal from 8.8% in the first four years of the 11th Five-Year Plan, says Steel Secretary PK Mishra, who has opined that it will be a challenge to meet 12th Plan production targets.

Mishra also said the country needs some policy corrections to ensure that promised private sector investments in the sector become a reality.

"The Indian steel industry is facing challenging times. The growth rate in steel demand, after registering an annual growth rate of 8.8% in the first four years of the 11th Plan, has fallen to 2.8% in the first six months of this current year," Mishra said.

He said the first four years of the 11th Plan witnessed a slowdown in domestic steel supplies.

Growth in finished steel production during this period was low at 5.8%, especially in comparison to growth in steel demand.

"It is felt that meeting domestic demand, which is likely to grow at the rate of 10.3% per annum in the 12th Plan, will be a highly challenging task. It is estimated that the country will require a crude steel capacity of 140 million tonnes by 2016-17 to meet domestic steel demand," Mishra explained.

"It is clear that in a business-as-usual scenario, domestic supply of steel will significantly fall short of domestic demand," he added.

He said while there are a large number of domestic and international private investors keen to invest in the Indian steel sector, a proactive government role will be required to convert these prospects into concrete initiatives.

"There is an urgent need to make necessary policy corrections or adjustments to increase domestic production of crude steel to avoid over-dependence on steel imports," he added.

To ensure time-bound implementation of greenfield capacities and facilitate rapid growth of the domestic steel industry, the Steel Ministry is drafting a new National Steel Policy and the first draft is likely to be ready for public discussion in the next few weeks, he said.

The output of the Indian steel industry is expected to reach 113 million tonnes by the end of the 12th Five-Year Plan.

Mishra said the Indian steel Industry is losing competitiveness in some traditional areas of strength and must take up R&D on a war-footing. For this, the ministry has brought out a roadmap on R&D and technology, he said.

"You may also be aware that investment in R&D by Indian steel companies is as low as -0.15% to 0.25% of turnover, as compared to 1 to 2% in known steel companies across the globe," Mishra said.

He also opined there is a need to discourage the export of iron ore from the country through appropriate measures.