Government assures measures to reduce logistics cost for steel players

The government on Wednesday assured steel makers that it will take appropriate measures to reduce the logistics cost of products that currently reaches as high as 28 per cent.

Speaking at a FICCI-organised webinar on 'Supportive Logistics for Indian Iron and Steel Industry', Minister of State for Steel Faggan Singh Kulaste told the participants that high cost of logistics is also a matter of concern for the ministry.

He sought suggestions from the stakeholders on how to reduce the logistics cost of raw materials and assured them that the ministry will take steps accordingly.

Kulaste said India has a target to produce 255 million tonnes of steel by 2030.

"In this context, from mines to the last-mile customer, about 800-850 million tonnes of raw material would require logistics. We will need huge infrastructure for this," he said.

Anticipating the needs of the future, the government has already started working on mega projects in the area of logistics like Sagarmala, Bharatmala and Dedicated Freight Corridor, Kulaste said.

The minister said that currently, for every 250 kilometer, transportation cost of iron ore, a key steel-making raw material, is Rs 800-Rs 1,000 tonne through rail. He added that it comes between Rs 2,000 and Rs 2,500 through road; while via waterways, it comes around Rs 450-550 and through slurry pipeline, it costs in the range of Rs 80-100.

He said that once the said projects are completed, these would help reduce both transportation cost and time for materials.

V R Sharma, co-chair of FICCI Steel Committee and managing director of Jindal Steel and Power Ltd (JSPL), requested the minister for his intervention to bring down the logistic cost for the industry.

He said, "It costs another Rs 8,000 per tonne on transportation of steel in India which is a huge amount. It adds about 28 per cent to the factory cost and the last-mile customer has to bear it. Port-handling charges add another 10 per cent. I request the minister to take measures to bring it down to about Rs 4,000 per tonne."

Alok Sahay, convener of FICCI Steel Logistics Sub-Committee and executive director (commercial) of Steel Authority of India Ltd, suggested for a long-term service agreement with the railways for providing suitable rakes within specified time. This will help customers plan his supply chain in a better way.

He also suggested a uniform rate for transportation of materials up to 100 km by railways.

Pankaj Satija, senior member of FICCI Steel Committee and chief regulatory affairs of Tata Steel Ltd, said logistics is an important part for the industry.

He suggested dedicated road corridors for transportation of materials and doubling of railway lines besides setting up slurry pipeline facilities.