Domestic steel gets infrastructure boost

Policy would focus on increasing annual steel production to 300 million tonnes by 2025

Domestic steel will now get preference in infrastructure under the National Steel Policy approved by the Union Cabinet on Wednesday. The move would boost the sales of debt-laden companies.

The policy would focus on increasing the country's annual steel production to 300 million tonnes by 2025, entailing an investment of Rs 10 lakh crore by 2030-31.

"India should have a globally competitive steel industry and we want that the per capita steel consumption in the country should be 160 kg by 2030," Finance Minister Arun Jaitley said while briefing the media after the Cabinet meeting.

The existing per capita steel consumption of the country is 60 kg. The government is of the view that surplus steel capacity should be utilised for government funded infrastructure projects.

The central government plans to create self-sufficiency in steel production by providing support and guidance to private manufacturers, micro, small and medium enterprises and public sector companies through this move.

The government had earlier said it was mulling making domestic steel use binding for state-funded projects.

The policy would also encourage adequate capacity additions, cost efficient production besides facilitating foreign investment in the steel sector.

The steel sector presently employs about 25 lakh people and has a capacity of little over 120 million tonnes.

Government think tank Niti Aayog had mooted the idea for a new and dynamic steel policy to bring the over $100 billion industry back on track.

The policy would be second such decision by the central government to revive the sentiment in the steel industry. From February 2016 to February 2017 government had imposed minimum import price (MIP) on various steel products in order to curb cheap imports mainly from China. The non-tariff barrier helped improve the financial situation of the domestic steel companies.

Crude steel production in 2015-16 stood at 89.77 million tonnes, while steel imports in 2016-17 (April-March) stood at 7.427 million tonnes, down from 11.712 million tonnes in 2015-16.

Imports in March 2017 (0.8 mt) was down by 19.7 per cent over March 2016 but was up by 51.8 per cent over February 2017.

"Given such trends in export-import, India emerged as a net exporter of total finished steel during March 2017 as well as April-March 2016-17," latest report by the joint plan committee said. India's consumption of total finished steel saw a growth of 3 per cent in April-March 2016-17 (83.93 million tonnes) over same period of last year. Consumption in March 2017 (7.989 million tonnes) was up by 2.2 per cent over March 2016 and was up by 13.4 per cent over February 2017, the JPC report added.