JSW Steel’s director (commercial and marketing) Jayant Acharya says India has all the ingredients required to be the ideal place for setting up steelmaking capacities, and the industry is slated to play a prominent role in translating the Make-In-India vision into reality. In an interview with FE’s Surya Sarathi Ray, he shares his views on what it needs to attract further investment. Excerpts:
What are the basic problems the country’s steelmakers are facing?
The main problem the steelmakers are facing is a huge surge in imports with supply from China, Korea and Japan and growing threat from Russia and Ukraine. Imports during FY 2014-15 surged in excess of 10 million tonne as against 5.7 million tonne the year before, i.e sharply up by about 80%. Moreover, imports are being dumped at extremely low prices, below the cost of production of many plants in India. A sluggish market demand in India on the back of weak infrastructure investment and manufacturing activities has resulted in excess inventory in the system. Imports have displaced domestically-produced steel through dumping at very low prices. This has resulted in secondary producers working at low capacity utilization levels. The second concern is higher domestic cost of iron ore, which has not corrected in line with the sharp decline in prices of iron ore in international markets. International iron ore prices over the last 12 months have corrected by about 58% as against 12% by NMDC in India. Adequate availability through additional sustainable mining of iron ore is the key for India for being competitive. Recent measures by the government to auction mines through a transparent process and passing of the MMDRA Bill is a welcome positive step. This will reduce uncertainty in business.
India’s per capita consumption of steel is very less compared to the global average. Will further capacity additions compound the problems being faced by the steel industry? Will it affect sales and the bottom-line of the steel industry?
India’s per capita consumption is low at about 60kg as against the world average of 220kg. India needs to expand its infrastructure and manufacturing. The Make in India vision of the PM is a focused step in the right direction. Steel is the backbone of growth of any economy. To grow manufacturing and create a world-class infrastructure in India, steel is an essential ingredient. India has resources in terms of raw material, manpower and can thus be the ideal place for setting up steelmaking capacities. It will make India self- reliant in meeting steel demand. So, addition to capacity in medium to long term for India is needed.
Imports are on the rise and touched a record high in 2014-15. How big is the problem and what is the way out? Do you think that if the current situation prevails for a couple of years, many secondary steelmakers will have to shut shop?
To contain the dumping of steel into India, aided by depreciating currencies in exporting countries relative to rupee, we need to immediately increase customs duty on steel and also take action on trade remedial measures, including enforcement of quality control order.
What does it need to take India’s steel capacity to 300 mtpa by 2025-26?
To increase steel capacities in India to 300 mtpa, the most important requirement is to provide iron ore linkages to steel producers to encourage investments for new capacity expansion. We should also tap into our existing coking coal resources, including starting of the Jharia coal mines. Adding capacities and infrastructure in railways, ports, waterways and highways is needed for movement of inward and outward traffic. Easier land and labour laws, improving ease of doing business, creating adequate avenues to raise finance from domestic and international sources at competitive rates are equally essential. India has the potential to be the second largest steel industry globally and is slated to play a prominent role in translating the Make-In-India vision into reality.