Steel companies devise action plan to induce market growth

Our Corporate Bureau

New Delhi, May 17: ALARMED by the forecast of a stagnant growth in the first half of the current fiscal, steel companies including SAIL, Tisco and Essar have outlined an action plan to induce market growth and create competitiveness in the sector.

In a CEOs policy forum on steel organised by the Confederation of Indian Industry (CII) recently, the industry has forged a plan for market growth by promoting steel as a metal of choice, shifting focus on rural marketing and exploring global markets.

It has also decided to develop grades and sizes conforming to international specifications to increase exports, while chalking out strategies for cost reduction to check indiscriminate imports.

According to the forecast made by Associated Council (Ascon), production and sale of steel sector will trail between 5-10 per cent in the next six months of the current fiscal.

During 2000-01, the sector had achieved a production growth of 11 per cent, while sales growth was under double digit at 7.5 per cent.

The projection for exports in the next six months of 2001-02 seems positive, as the Ascon data shows export growth between 5-10 per cent from a level of zero during 2000-01. During 1999-2000, exports of steel registered a 35 per cent growth.

Even in the long run, CII does not expect the domestic demand-supply scenario in the steel sector to show a dramatic improvement in the next couple of years. The major constrains faced by the domestic steel sector is influx of defective or sub-standard steel products through imports.

“Government should strengthen the Indian anti-dumping laws in the steel sector in order to restrict cheap imports,” a CII official said.

CII has requested the government not to remove the floor prices for seven items of finished steel.

“It will prevent Indian companies in effectively competing with international companies. Moreover, removing the floor prices could once again attract dumping into the country,” CII said.

The rising imports of steel from CIS countries was one of the major concerns of the domestic steel sector. To check this unbridled cheap steel imports, anti-dumping duty has been levied on import of HR coils from Russia and Ukraine and the government had fixed floor prices for seven items of finished steel. CII has recommended elimination of land market barriers like rent control and land ceiling to spur residential construction.

It is expected that power sector reforms through privatisation and efficient distribution channels will also provide an impetus to steel demand.