The Prime Minister’s Office (PMO) has asked the steel ministry for a status report of the proposed joint venture between state-run SAIL and global steel major ArcelorMittal for automotive steel.
This follows India-born billionaire Lakshmi Mittal seeking Prime Minister Narendra Modi’s intervention for an early formation of the alliance hanging fire for long.
The move comes even as ArcelorMittal, as per its latest annual report, is set to curtail its merger & accusation activities globally due to difficult global economic conditions.
The proposed 50:50 JV would entail a $1-billion investment for setting up the 1.2 million tonne per annum plant at Rourkela in Odisha. The two companies had signed a memorandum of understanding (MoU) in May 2015 for setting up the JV to cater to the fast-growing automotive sector of India, poised to become the the world’s fourth largest automobile manufacturing nation by 2020.
Sources said though major issues like the proposed pattern of shareholding of the JV have been ironed out, some “commercial issues” are needed to be addressed before the two parties sign on the joint venture agreement. Increasing the availability of indigenously produced automotive steel would reduce India’s dependence on imports and is likely to give the automotive industry a sustainable competitive advantage.
As per the MoU, SAIL was supposed to supply steel to the joint venture entity while the ArcelorMittal will provide the required technology. ArcelorMittal caters to around 17% of the global auto steel demand.
The JV with SAIL may also act as catalyst for other foreign steel firms to invest in India, which aspires to create 300 MT production capacity by 2030-31 from around 120 MT now.