The government aspires to enhance the country’s steel production capacity to 300 million tonnes (mt) by 2030-31 from around 125 mt now with a projected investment of R10 lakh crore even as it, in the draft New Steel Policy (NSP), admits that capital mobilisation will be a challenging task given the enormity of required fund and the current industry situation.
The proposed NSP 2017, which has been put out on the steel ministry’s website for public comments, also intends to domestically meet entire demand of high grade automotive steel, electrical steel, special steels and alloys for strategic applications by 2030-31 and be a net exporter of the alloy by 2025-26. Presently, these products constitute the bulk of the imports that stood at 11.7 mt last fiscal.
The proposed policy aims to enhance India’s per capita steel consumption to 160 kg by 2030-31 from around 61 kg now with the vision of creating a globally competitive steel industry that promotes inter-sectoral growth and to create a self-sufficient steel industry that is technologically advanced, globally competitive and promotes inclusive growth.
“The NSP 2005 sought to indicate ways and means of consolidating the gains flowing out of the then economic order and charted out a road map for sustained and efficient growth of the Indian steel industry. However, the unfolded developments in India as also worldwide, both on the demand and supply sides of the steel market, have warranted a relook at the different elements of the NSP 2005,” the ministry said justifying the need to give the policy a relook.
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Admitting that funding would be a problem, the proposed policy said the steel industry will be encouraged to reduce capital costs and remain innovative in developing appropriate structure of the capital to minimise debt and service equity. The steel ministry will also make necessary efforts to identify bad debts in the sector. Such companies will be encouraged to lower their debt/Ebitda ratio by adopting an appropriate debt restructuring in consultation with banks as per the RBI guidelines, it said.
Over the past two decades, Indian steel industry has developed capabilities of producing a wide range of sophisticated steel at par with global best practices addressing diverse needs of the end user industries. However, India still needs to make a special effort to domestically produce steel for high-end applications, electrical steel (CRGO), special steel and alloys for power equipment, aerospace, defence and nuclear applications.
Multiple issues have also adversely impacted the steel sector. Companies also faced substantially increased operating costs on account of increased logistics & raw material costs and other charges. The policy states that the steel industry will have to strongly depend on the growth of domestic consumption as the global economic prospect weakens in the face of idle steel capacity globally.