The steel ministry wants prices in India to come down below the import parity level. It has asked all producers and proposed investors in India to suggest as to what cushion the government can give for cost-effective production of steel.
The Union steel secretary RS Pandey told FE that the ministry has called a meeting of all the major steel producers and proposed investors like Mittal and Posco on August 17, to discuss ways of cost-effective production.
He said prices in India were market-driven and at par with the global prices. However, in relative terms?considering the purchasing capacity index?prices are higher in India.
The average price of steel in India is about Rs 26,325 or $650 a tonne at present compared with China?s $500-550, Russia?s $450-500 and South Korea?s $700 including a freight charge of $60 per tonne but excluding the 5% import duty and port handling charges of $5-8.
?Indian consumers should get steel at a lower price, for which producers must think of cost effective ways of making it. The government will do its bit to give cushion to producers ? Pandey said.
He said the meeting on August 17 has been convened to know the plans of steel producers relating to capacity addition and the impediments of implementing them.
The steel ministry, he said, would refer these problems to the inter-ministerial committee, comprising representatives of the steel, mining, environment, railways, shipping and transport ministries and the respective state governments, which would work out a solution and create a sort of road map to implement that.
?It is most important for the steel industry to find out a cost effective route to ensure growth,? Pandey said. He said more than giving direct fiscal incentives to producers, the government wants to upgrade infrastructure so as to reduce logistics costs. Besides, it wants to enforce more efficiency in production methods, which would come from enhanced research and development.
The Steel Development Research Mission is in the offing with a corpus of Rs 60-65 crore. All the major steel producers would contribute and the government would act as a facilitator.
The government would make use of the existing institutions for enhanced R&D, Pandey said. India is aiming to produce 200 million tonne by 2020, which means a capacity addition of 115m tonne in the next 13 years entailing an investment of Rs 600,000 crore. Steel consumption in the last fiscal grew 11.6%.